transition path from one steady state to another explodes

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transition path from one steady state to another explodes

Postby llie19 » Sat Mar 16, 2013 1:25 am

hi, all. newcomer to dynare and first time poster here. i have a two country model, with Uzawa internal discounting (periodical discounting beta of home depends on current consumption and labor) in it. in dynare i can find steady states and do irfs just fine. however, under the deterministic case, i want to find the transition paths of all endogenous variables from 1 steady state to another (the 2 steady states are under 2 different home TPFs, all other parameters unchanged). All the other variables (c,i,k,p..) seem to behave well, and quickly converge to the new steady state value, but bonds (b) just explodes to positive or negative infinity (big cliff at the end of the plot). has anyone experienced something like this? it should not be, because in the computed new steady state bonds is a number. it could be a computational thing, or caused by something fundamental in my model, probably Uzawa discounting? When a good shock hits (A goes up), home agents temporarily becomes more impatient than foreign consumers (lower beta), maybe that pushes lending/borrowing out of whack?

i attached my code, in initval A=0.9, and in endval A=1, and that's the only exogenous variable difference between the 2 steady states, and you can see in output the steady state values seem all reasonable. i have searched for similar issues, but only came up with this thread that may or may not be similar to the problem i am having.
viewtopic.php?f=1&t=4425

thanks a lot.
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determ_exp.mod
why b explodes on transition path?
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llie19
 
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