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Hello,

I am very new to Dynare and I am replicating a two-sector RBC model by Arellano, Bulir, Lane and Lipschitz (2009), I have attached their paper. My code was working without k, kdt and kdn which are essentially from equation 8 in the paper. The error message says "Impossible to find the steady state. Either the model doesn't have a steady state, there are an infinity of steady states, or the guess values are too far from the solution". I wonder where I did wrong?

Below is the model block:

model;
c = (omega*ct^(-mu)+(1-omega)*cn^(-mu))^(-1/mu);
pn = ((1-omega)/omega)*(cn/ct)^(-(1+neta));
pc = (omega^(1/(1+neta))+(1-omega)*(1/(1+neta))*pn^(neta/(1+neta)))^((1+neta)/neta);
k = (kt^(-vega)+kn^(-vega))^(-1/vega);
kdt = (kt^(-vega-1))*(kt^-vega+kn^-vega)^((-1/vega)-1);
kdn = (kn^(-vega-1))*(kt^-vega+kn^-vega)^((-1/vega)-1);
(c^(-sigma)/pc) = beta*(c(+1)^(-sigma)/pc(+1))*(At*exp(eps)*alpha*(kt(+1)/labt(+1))^(alpha-1)+1-delta)/kdt(+1);
At*exp(eps)*(1-alpha)*(kt/labt)^alpha = pn*An*exp(eps)*(1-neta)*(kn/labn)^neta;
(At*exp(eps)*alpha*(kt/labt)^(alpha-1))/kdt = pn*(An*exp(eps)*neta*(kn/labn)^(neta-1))/kdn;
ct(-1)+(k)-(1-delta)*(k(-1))=At*exp(eps)*kt(-1)^alpha*labt(-1)^(1-alpha);
cn = At*exp(eps)*kn^neta*labn^(1-neta);
labn+labt = 1;
eps = rho*eps(-1)+e;
k = i(-1)+(1-delta)*k(-1);
y = At*exp(eps)*kt^alpha*labt^(1-alpha)+pn*At*exp(eps)*kn^neta*labn^(1-neta);
end;

Try using the most recent unstable version together with

Code: Select all

steady(solve_algo=4,maxit=10000);