A stochastic RBC model with inelastic labor

[gokhan]

Hi eveybody,
I am new to dynare and I have a basic stochastic RBC model with inelastic labor.
Unfortunately, my code does not work properly.
As expected for a new user, I could not detemine the main culprit although I have checked user guide.
Could anyone help me?
Best regards...
Gokhan

MY code:
var y c k lab z i;
varexo e;
parameters beta theta delta alpha gamma rho sigma;
beta = 0.987;
theta = 0.357;
delta = 0.012;
alpha = 0.36;
gamma = 2;
rho = 0.95;
sigma = 0.007;
model;

(c^theta*(1-lab)^(1-theta))^(1-gamma)/c=beta*((c(+1)^theta*(1-lab(+1))^(1-theta))^(1-gamma)/c(+1))*
(1+alpha*z(+1)*k^(alpha-1)*lab(+1)^(alpha)+(1-delta)); // Euler equation

c^theta/(1-lab)=theta/(1-theta)*(1-alpha)*z*k(-1)^alpha*lab^(-alpha); // FOC for labor

k=z*k(-1)^alpha*lab^(1-alpha)-c+(1-delta)*k(-1); // law of capital accumulation

z=rho*z(-1)+e; //technology

y = c+i;

i = k-(1-delta)*k(-1);

end;

initval;
k = 1;
c = 1;
lab = 0.3;
z = 0;
e = 0;
end;

shocks;
var e = sigma^2;
end;

steady; // finds the steady state

check; // provides the eigenvalues

stoch_simul(periods=2100, hp_filter=1600, irf=60, order=1); // simulates the model

[jpfeifer]

Put

Code: Select all

resid(1);


before steady; to see that your starting values are too poor to find the steady state.

[gokhan]

Thanks jpfeifer,
But could you teel me a way to get better starting values?

[jpfeifer]

Considering the simplicity of your model, you could compute the steady state by hand.