Dynare 3 vs 4.0.3 - Error in steady states

[javiersan]

Hi

I have a model that runs well in Dynare 3 but when I run it on Dynare 4.0.3 I get the following error message:

??? Error using ==> steady_ at 51
The seadystate values returned by EuroArea_steadystate.m don't solve the static
model!

Error in ==> steady at 52
steady_;

Error in ==> EuroArea at 146
steady;

Error in ==> dynare at 102
evalin('base',fname) ;

How can this be?

Thanks for your help

Javier

[jpfeifer]

Hi Javier,
to get an answer you should post your .mod- and steady state-file.

[javiersan]

Sure, here they are.

This is a simple model of interactions between Euro Area and a small country. Monetary policy is set based on Euro Area wide parameters and fiscal policy is set at the small country level. I have set the steady state values at zero which runs ok in Dynare 3 but crashes in Dynare 4. Any help would be appreciated.

Regards,

Javier

[javiersan]

and the data

[jpfeifer]

I have never worked with Dynare 3. However, for Dynare 4, your steady state file is ill-suited as it does not supply the correct steady state but rather starting values. In this case, Dynare takes these values as steady state values and does not try to solve further. Moreover, the required lines of code are missing in the steady state file to enable Dynare to run with it (see http://www.dynare.org/phpBB3/viewtopic.php?f=1&t=1834&p=5055&hilit=steadystate.m#p5055).
You now have two possibilities:

1. You delete the steady state file and set

Code: Select all

steady;

to

Code: Select all

steady(solve_algo = 3);

in the mod-file. Dynare will then find the steady state by using Chris Sims’ solver, which gives you an approximately correct steady state (some rounding error is involved)

2. You use the attached steady state file where I added the required lines at the beginning and the end of the code and added the correct exact steady state values.

[javiersan]

Thank you very much for your help Johannes. The modified _steadystate.m file solves the problem.

Best regards,

Javier