Hello,
I am trying to simulate a two-country model with a friction in currency exchange. I introduced a currency broaker in Gabaix and Maggiori (QJE2015) into a simple two-country dynamic model, to see how government intervention shock (g in the code) affects the real exchange rate (et in the code). I closely follow their paper and its appendix to set up the model, but somehow the BK condition is not satisfied. In the paper they say the model is stationary. I checked the timing of the variables but couldn't find any problem.
I attach my code. I would greatly appreciate if you give me some help or at least some hints.
Thank you very much.
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Currency exchange model: BK condition
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Currency exchange model: BK condition
by He-day » Sat Feb 20, 2016 10:15 pm
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Gamma_simple.mod- Dynare code
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Re: Currency exchange model: BK condition
by jpfeifer » Mon Feb 22, 2016 5:35 am
Is there a steady state file missing?
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