Dynare forums

hi , I would like to create a model about climate economics.and I wrote codes as below.But they are not working properly and system gives error as below.
Appreciate if someone can help me. thanks


var L A k c q omega Tat;
varexo e;

parameters alfa ro gamma sigmak w gl ga psi sigmae ;

alfa=0.45;
ro=0.015;
gamma=0.33;
sigmak=0.1;
sigmae=0.01;
w=1.08;
psi=0.003;
gl=0.134;
ga=0.016;


model;

L*c^(-alfa)=((1/(1+ro))*c(+1)^(-alfa)*((gamma*A(+1)*k^(gamma-1))/(1+omega))-sigmak);
q=(A*k^gamma)/(1+omega);
k=((A)*k(-1)^(gamma))/(1+omega)-c-sigmak*k(-1);
L=L(-1)*(1+gl);
A=A(-1)*(1+ga);
omega=psi*exp(Tat)+psi*exp(Tat)^2;
Tat=w*Tat(-1)+e;
end;


initval;

L=6838;
k=19.74;
q=63.69;
c=44.34;
A=3.8;
omega=0.9;
end;

shocks;
var e=sigmae^2;
end;

steady;
stoch_simul(hp_filter=1600,order=1,irf=40);

system gives error as follow;
Residuals of the static equations:

Equation number 1 : 0.1
Equation number 2 : 63.69
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 6 : 0
Equation number 7 : 0


Error using print_info (line 74)
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

Error in steady (line 92)
print_info(info,options_.noprint, options_);

Error in climate (line 157)
steady;

Error in dynare (line 180)
evalin('base',fname) ;

The way you set up your model with trends in L and A there exists no steady state. L and A will go to infinity.

Thank you very much indeed.

Hi,
I am a newbie in DYNARE. I need help to clarify a basic question about the how to compute steady state.
Normally when we solve a DSGE model (RBC/N.Keynesian), is the steady state value usually computed by DYNARE or do we need to compute it using paper & pencil first & later we feed the value to the DYNARE to the job?
Is there any good example that I can refer to?

Thanks very much in advance
lin

For smaller models, nonlinear solvers often work reasonably well. For bigger models and estimation, pencil and paper is often preferable. See also Remark 15 (initval vs. steady_state_model vs. steadystate-file) in Pfeifer(2013): "A Guide to Specifying Observation Equations for the Estimation of DSGE Models" https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf.