[DynareDev] Strange change in solve1

Dear Michel,

when moving from 4.2 to 4.3

we changed line 122 of solve1 from

p=-(fjac2+sqrt(nn*eps)*max(sum(abs(fjac2)))*eye(nn))(fjac'*fvec);

to

p=-(fjac2+1e6*sqrt(nn*eps)*max(sum(abs(fjac2)))*eye(nn))(fjac'*fvec);

That is, we added a constant of 1e6. Is there a good reason for this? I tried to use the replication code of Eggertsson, Ferrero und Raffo (2014), written for 4.2.5 and it is unable to find the steady state in 4.3 because this constant was added. As this is not the first time people report that 4.2 succeeds in finding steady states that 4.3 did not find, I would suggest moving back.

Best,

Johannes

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Johannes Pfeifer

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