Why this simple RBC model is not running?

General DSGE Modeling
1

Hello, I was trying to run a simple RBC model with Govt. In this model, Govt taxes labor and capital income with time varying rates.

I have written the steady state block. But still, the dynare is giving me the error:

Residuals of the static equations:

Equation number 1 : 0.005531
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : -0.0050454
Equation number 5 : 0
Equation number 6 : 0
Equation number 7 : 0
Equation number 8 : 0
Equation number 9 : -0.058171
Equation number 10 : 0
Equation number 11 : 0
Equation number 12 : 0
Equation number 13 : 0

error: The steadystate file did not compute the steady state.

Any help is appreciated!!

WRE1.mod (2.0 KB)

2

One mistake that I was making was wrong steady state expression for R. That I have resolved. Now eqn 4 and 9 show residual.

3

I further refined steady state expression. Now :slight_smile:

Residuals of the static equations:

Equation number 1 : 0
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 6 : 0
Equation number 7 : 0
Equation number 8 : 0
Equation number 9 : -0.0517
Equation number 10 : 0
Equation number 11 : 0
Equation number 12 : 0
Equation number 13 : 0

error: The steadystate file did not compute the steady state

WRE2.mod (2.4 KB)

4

I do not know the model, but the definition of the steady state for D is weird. I do not understand how it can be an arbitrary fraction d_ss, equal to .5 in your calibration, of output Y. If I ready equation 9 correctly, I would replace:

D = d_ss*Y;

by

D = (tau_k*R*K + tau_l*w*N-G)/r;

and also replace d_ss in the two last equations by

STEADY_STATE(D)/STEADY_STATE(Y)

With these modifications the mod file runs without trouble.

Best,
Stéphane.

5

Sir please look at the most recent file :

WRE2.mod (2.4 KB)

6

Stephane, thank you for your reply. The problem was expression for tau_k. I corrected it and made D predertmined. Now the code is running!!

WRE2.mod (2.4 KB)