Solving DSGE models with financial accelerator

[mgeremew]

Hi Everyone,

I was trying to solve a closed economy DSGE model on Dynare. I am having the following error message repeatedly while trying to run the .mod file.

STEADY: numerical initial values incompatible with the following equations
8

Error using dynare_solve (line 96)
exiting ...

Error in steady_ (line 120)
[oo_.steady_state,check] = dynare_solve([M_.fname '_static'],...

Error in steady (line 54)
steady_;

Error in test1 (line 224)
steady;

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

Any help wiil be greatly appreciated.

MG

[ripatti]

Given your initial values, or lack of them, you probably try to divide by zero.

[mgeremew]

Thank you very much! You were right i had zero values for some parameters. But i have a slightly different error message now related to convergence. Here it is...

SOLVE: maxit has been reached
Error using steady_ (line 132)
STEADY: convergence problems

Error in steady (line 54)
steady_;

Error in test1 (line 224)
steady;

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


I really appreciate your help.

MG

[ripatti]

You may try different algorithms and, if you are lucky, this helps. Typically does not. Then try to solve the steady state analytically (recursively) or solve a simpler version analytically and use these as initial guesses. Good luck!