Capital frictions

[georam11]

Hello there,

I am trying to run the model in Kaltenbrunner and Lochstoer (2010) paper on consumption smoothing. The mod file and the paper is attached with this mail.
I am getting the following error message. Please could help me to understand where I have gone wrong?

??? Error using ==> print_info at 72
The steadystate file did not compute the steady state

Error in ==> stoch_simul at 98
print_info(info, options_.noprint, options_);

Error in ==> Kaltenbrunner at 209
info = stoch_simul(var_list_);

Error in ==> dynare at 180
evalin('base',fname) ;


Best,
Ammu

[jpfeifer]

It seems you did not provide the most recent version of the file. I get the error

ERROR: Basic_capital_friction.mod: line 32, cols 20-21: Unknown symbol: lz

[georam11]

Apologies Prof Pfiefer. Please find attached the latest version of the mod file. Looking forward to your comments.

Best,
Ammu

[jpfeifer]

I think you need to properly detrend your model. You currently use beta as the growth-adjusted discount factor, i.e. abstracting from mu. That leads to a complex steady state. Looking at your mod-file, you seem to account for growth only when the author's mentioned this explicitly. But more equations are affected.