Standard Neoclassical Growth

[mjs19]

Hi, I have the following code for the neoclassical growth model without labor. When I run the code, I receive an error message telling me about multple steady states (which is in fact true, we know k=0 and k=k_ss are both valid). Is this really the error? How can I get Dynare to choose the non-trivial steady state?
Thanks.

[jpfeifer]

Your initial values are poor. For your model, the steady state is easily computed. Use

Code: Select all

var c k z;
varexo e;
parameters beta gamma alpha delta rho s;
beta = 0.987;
gamma = 1;
delta = 0.012;
alpha = 0.4;
rho = 0.95;
s = 0.007;
model;
c^(-gamma)=beta*c(+1)^(-gamma)*(alpha*exp(z(+1))*k^(alpha-1)+1-delta);
k=exp(z)*k(-1)^(alpha)-c+(1-delta)*k(-1);
z=rho*z(-1)+s*e;
end;

steady_state_model;
k = ((1/beta-(1-delta))/alpha)^(1/(alpha-1));
c = k^alpha-delta*k;
z = 0;
end;

shocks;
var e;
stderr 1;
end;

steady;

stoch_simul(order=1,periods=100);



[mjs19]

Thanks Professor, didn't know we had the option to manually input the steady state.