Simple Solow Model in Dynare

[SantiagoD999]

Hello professor Juillard,

Using your excellent Julia package I came across with an error. Here I show the .mod file for a simple Solow model.

% Simple Solow Model

var Y K Z;
varexo e;

parameters alpha delta s rho;

alpha = 0.35;
delta = 0.025;
s = 0.1;
rho = 0.75;

% Model equations
model(linear);

Y=Z+K(-1)alpha;
K= (1 - delta)K(-1) + deltaY;
Z = rhoZ(-1)+e;

end;

shocks;
var e; stderr 1;
end;

steady;

stoch_simul;
Solow.txt

WHICH GIVES:

Steady state

───┬─────
Y │ 0.0
K │ 0.0
Z │ 0.0
───┴─────

The model is already linearized and the steady state of the variables is correct (0,0,0) then I get this error:

BoundsError([0 1 2; 3 4 5], (3, 1))
Do you know why is this happening?

Thank you very much.

[MichelJuillard]

Hello Santiago,

thank you for reaching out. Your model doesn't strictly belong to the class of DSGE models as it doesn't contain forward-looking expectational variables. Nevertheless, as it is a limit case, we will add support for such models as well.

Michel

[SantiagoD999]

That's great, thank you for your timely response.