I construct a large two-country DSGE model, and want to solve it by dynare 5.2. I use ‘model_diagnostics’ command. The initial code is

codeJ.mod (7.3 KB)

. In this code, dynare can solve the model, and there is no any problems. However, when I replace the initial value by new steady state value

codeJ_copy.mod (7.6 KB)

, ‘model_diagnostics’ shows:

MODEL_DIAGNOSTICS: The Jacobian of the static model is singular

MODEL_DIAGNOSTICS: there is 1 colinear relationships between the variables and the equations

Colinear variables:

p_md

Colinear equations

18 21 22 23

MODEL_DIAGNOSTICS: The presence of a singularity problem typically indicates that there is one

MODEL_DIAGNOSTICS: redundant equation entered in the model block, while another non-redundant equation

MODEL_DIAGNOSTICS: is missing. The problem often derives from Walras Law.

I don’t know why the replacement of initial value can lead to this problem. How can I deal with this problem? Could you help me? Thanks a lot!