Convergence problems

[follicule]

Hi,
I am working on a model of financial accelerator for an open economy. I have built up my model and when i try to run it , i always get the error, CONVERGENCE PROBLEMS. i can't know how to deal with that . Please help !

Here is the file and data.

Thanks

[reluginbuhl]

You might want to try programming the analytic solution to your model's steady state. See section 3.6.3 of the user's manual:

"The alternative is to write a Matlab program to find your model’s steady
state. Doing so has the clear advantages of being able to incorporate your
Matlab program directly into your .mod file so that running loops with different
parameter values, for instance, becomes seamless. NOTE! When doing so,
your matlab (.m) file should have the same name as your .mod file, followed
by steadystate For instance, if your .mod file is called example.mod, your
Matlab file should be called example steadystate.m and should be saved in
the same directory as your .mod file. Dynare will automatically check the directory
where you’ve saved your .mod file to see if such a Matlab file exists. If
so, it will use that file to find steady state values regardless of whether you’ve
provided initial values in your .mod file."

This might help...

[Ravelomanana]

After making a brief review of your model. I think you should linearize it because initial values are more difficult to find. By linearizing it you dont need to set up init val block because they are all equal to zero. It may take more time but it avoids convergense issue

[jpfeifer]

@Ravelomanana: this is not a solution. For linearization, you tyically need to compute the steady state analytically. But if you can compute the steady state, you an use the steady_state_model-block without the need for linearization