Two-country DSGE model with an exogenous RW (Help)

[lkebalo]

Code.mod

(18.32 KiB) Downloaded 154 times

Hello everybody;
Allow me to ask you a help. I work on a two-country DSGE model which potentially want to form an economic and monetary union. The two countries present a very strong dependence (in term of import and liability dollarization) vis-a-vis of the rest of the world which is considered exogenous. However, turning my model I meet a recurrent problem which is:

"
??? Error using ==> print_info at 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 at 92
print_info(info,options_.noprint, options_);

Error in ==> prog at 798
steady;

Error in ==> dynare at 180
evalin('base',fname) ; "


I attached the mod file below. Any help will be very much appreciated.

Can you help me please?
Thank you in advance.
Best Regards

Code.mod

(18.32 KiB) Downloaded 154 times

[jpfeifer]

Given the size of your model, I would suggest to start with a more simple one and then add features. There are a million things that could go wrong.

A more practical issue: initialize all endogenous variable. You forgot s_A and S_B, which should be 1, I guess. Cranking up in steady

Code: Select all

steady(maxit=10000);

yields a steady state, but it seems hardly sensible.

[lkebalo]

Thank you very much professor.