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I get this error (Error using ==> lnsrch1) after trying to run a model based on Furceri, D. and A. Mourougane (2010), “The Effects of Fiscal Policy on Output: A DSGE Analysis” (just section 2.1, firms). Any ideas on what the error might be? (I attached the file), i´m quite new at this, thanks.

There is a problem with the steady state. Put

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resid(1);

before steady. One of the problems is the last equation:

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0.03=(P(+1)/P-1);

In steady state P(+1)=P. Thus, the righthand side is 0 and cannot be 0.03.