NK model with capital and variable utilisation

[economist1991]

Hello all,

I am trying to run a New keynesian model with capital and variable capital utilisation, but I am some issues with the steady state. I have written the code immaculately so I am not sure what I am doing wrong. I have attached the file..The error i am getting is:

Residuals of the static equations:

Equation number 1 : 0
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : 0
Equation number 5 : 0
Equation number 6 : 1.0001
Equation number 7 : 0
Equation number 8 : 0
Equation number 9 : 0
Equation number 10 : 0
Equation number 11 : 0
Equation number 12 : 0
Equation number 13 : 0
Equation number 14 : 0
Equation number 15 : 0.9799
Equation number 16 : 0
Equation number 17 : -0.9799
Equation number 18 : 0
Equation number 19 : 0

[jpfeifer]

Your initial values are wrong. Use:

Code: Select all

initval;
er=0.000;
ez=0.000;
i     = RHO;
rn    = RHO;
r   = RHO;
ygap  = 0;
y     = 0;
n     = 0;
pi    = 0.00;
end;


After that, there still is an issue with the Blanchard-Kahn conditions.

[economist1991]

Thanks a lot! I fixed the code, made an error with the steady states.