I am a new user of Dynare and this may be a very basic question. I am estimating an open economy model based on Gali and Monacelli (2005) and Justiniano and Preston (2010). I get the following error from model_diagnostics. I have checked my equations a few times and it is consistent with what has been provided. If anybody could give me more insight into my error, I would be very grateful. Thanks!
model_diagnostic: the Jacobian of the static model is singular
there is 1 colinear relationships between the variables and the equations
1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18
The presence of a singularity problem typically indicates that there is one
redundant equation entered in the model block, while another non-redundant equation
is missing. The problem often derives from Walras Law.
HW2v2.mod (7.86 KB)