Finn (2000) energy model

[moise_nken]

Hello everybody,

I am replicating the paper "Perfect Competition and the Effects of Energy Price Increases on Economic Activity", Finn (2000), and I encounter some problems. If somebody can help me it would be great. I join to this post the dynare code and the derivations. Thank you in advance.

Best,

Moïse

[stsp]

If you are more specific what the problem is, then it is more likely someone will help.

I ran your model and found out that it doesnt find a steady state. You could start with simplifying the model such that it is more easy to find the steady state. Or you might want to consider if there are infinitely many steady states. For example, price levels can be indeterminate. Then you can normalize the steady state price using the ' DYNAMIC' and ' STATIC' expressions. (I don't have that much experience myself with Dynare, but my suggestions should work ).

[jpfeifer]

There must be more. Using the unstable version with

Code: Select all

steady(maxit=1000);


I get a steady state, but the Blanchard-Kahn conditions are violated. Most probably a timing problem.

[moise_nken]

@stp

My problem is that, although I verified many times my equations, I could not find a steady state. I wrote the code by linearizing the model myself and I could run the code. But I want to understand why it is not working the way I wrote, i.e in exp(.).Thank you.

@jpfeifer

Thank you. I tried to add steady(maxit=1000); but it still does not find a steady state. I really do not understand why, I have checked and recheck many times my equations. I posted my code here in case there is a mistake that i do not see. Thank you for your help.