Abnormal result by 'model_diagnostics' command;

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:
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!

Your model seems to have multiple steady states and not all of them make sense.

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Thank you very much! I just found a abnormal initial value of the variable ‘p_md’. When I correct it, the results seem normal. Hence, I think my model does have multiple steady states.

I have another question. Does ‘multiple steady states’ means that this model is wrong or makes no sense?

No, that is not unusual. Even the simple Solow has two steady states.

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Thanks!That’s very kind of you. I think I should learn more about macroeconomics.