Hi all,

I’m using MCP to solve firm’s profit maximization as recommended by a paper.

```
output(t).. Y(t)=e=(kappa*[epsilon*K(t)**(1-1/sigma)+(1-epsilon)*L(t)**(1-1/sigma)]**[1/(1-1/sigma)])-0.5*psi*power(I(t)/K(t)-(n+delta),2)*K(t);
wage(t).. (1+cr)*w(t)=e=((1-epsilon)*kappa*L(t)**(-1/sigma)*(epsilon*K(t)**(1-1/sigma)+(1-epsilon)*L(t)**(1-1/sigma))**(-1+(1/(1-1/sigma))));
cost_accumulation(t).. q(t+1)=e=1+psi*(I(t)/K(t)-(n+delta));
cost(t).. r*q(t)=e=(epsilon*K(t)**(-1/sigma)*kappa*(epsilon*K(t)**(1-1/sigma)+(1-epsilon)*L(t)**(1-1/sigma))**(-1+(1/(1-1/sigma))))+0.5*psi*[power(I(t)/K(t),2)-power(n+delta,2)]+(1-delta)*q(t+1)-q(t);
capital_accumulation(t).. I(t)=e=K(t+1)-(1-delta)*K(t);
model a /output.Y wage.w cost_accumulation.q cost.I capital_accumulation.K /;
solve a using mcp;
```

I am having problems with the equation cost_accumulation(t) and cost(t), perhaps due to it being t+1. Equation cost(t) includes q(t+1) from cost_accumulation(t).

I appreciate any help to solve this

Thank,

Fabio

aa.gms (1.01 KB)