Dear all,

I am trying to use dynare to solve a perfect foresight model. When the permanent shock is small, such as from 0.4 to 0.41 for a parameter, dynare can solve the model. But when the shock is larger, such as from 0.1 to 0.41, dynare failed to solve perfect foresight model. I‘ve tried stack_solve_algo from 1 to 7, but it failed. I really don’t know how to solve it .

(Attached is my code)

Thank you very much

solve_ss1.m (1.1 KB)

steady_state2.m (2.6 KB)

tran_path.mod (5.3 KB)

There is something strange going on here. As soon as `tau`

becomes smallerr than about 0.36 the solver fails. Maybe it has something to do with the economics of the problem. It seems some variables that can only be positive hit 0 during the adjustment path