First time simulation, some problems!

[magogiro]

Hi everyone,

I'm writing a code to simulate a deterministic model without shocks but It does not run properly and I think that the error is in the initial values, could someone help me out please ?




//Variables
var Y, C, K, L, A, N;
varexo psi;
//does not include exogenous term ed
parameters alpha, n, g, delta, beta, gamma, h;

alpha=0.3;
//ed=0.015138557;
n=0.026;
g=0.156;
delta=0.01;
beta=0.90;
gamma=0.5;
h=0.5;



model;
Y = A*(K^alpha)*((L*exp(psi))^(1-alpha));
C+K(+1)-(1-delta)*K=A*(K^alpha)*((L*exp(psi))^(1-alpha));
(C(+1)/C)=beta*((1-delta)+alpha*A(+1)*K(+1)^(alpha-1)
*(L(+1)*exp(psi))^(1-alpha));
(1-alpha)*A*(K^alpha)*((L*exp(psi))^(-alpha))*(h*N-L)=C*((1-gamma)/gamma);
N(+1)=(1+n)*N;
A(+1)=(1+g)*A;

end;



initval;
Y = 1.08068253095672;
C = 0.80359242014163;
L = 0.5;
K = 5;
N = 2;
A = 2;
psi=0.1;

end;

stoch_simul(periods=2100);

______________________________
Error messages obtained:

Error using svd
Input to SVD must not contain NaN or Inf.

Error in cond (line 39)
s = svd(A);

Error in solve1 (line 118)
elseif bad_cond_flag && cond(fjac) > 1/sqrt(eps)

Error in dynare_solve (line 126)
[x,info]=solve1(func,x,j1(r(i):r(i+1)-1),j2(r(i):r(i+1)-1),jacobian_flag,
bad_cond_flag, varargin{:});

Error in resol (line 102)
[steady_state,check1] =
dynare_solve(fh,steady_state,options_.jacobian_flag,...

Error in stoch_simul (line 66)
[oo_.dr, info] = resol(oo_.steady_state,0);

Error in Macro_adv (line 120)
info = stoch_simul(var_list_);

Error in dynare (line 120)
evalin('base',fname) ;

[jpfeifer]

Your model is not stationary and does not have a well-defined/sensible steady state in its current undetrended form. For example

Code: Select all

N(+1)=(1+n)*N;

with n not equal to 0 has no steady state for N except for N being 0 (which is well-defined but not sensible).