I am trying to estimate a small open economy model based on Gali and Monacelli (2005). I could solve the model. But, when I try to estimate the model I get the following error message.
Error using ==> print_info at 40
Blanchard Kahn conditions are not satisfied: no stable equilibrium

Error in ==> initial_estimation_checks at 69
print_info(info, DynareOptions.noprint)

Error in ==> dynare_estimation_1 at 169
oo_ = initial_estimation_checks(objective_function,xparam1,dataset_,M_,estim_params_,options_,bayestopt_,oo_);

Error in ==> dynare_estimation at 70
dynare_estimation_1(var_list,dname);

Error in ==> mycodebay at 273
dynare_estimation(var_list_);

Error in ==> dynare at 120
evalin(‘base’,fname) ;

I am new to DSGE modeling and Dynare. Can anyone help me to correct this error? Files are attachedmycodebay.mod (4.17 KB)sldata.xls (23.5 KB)

Usinge model diagnostics, there are colinear variables in the model:

model_diagnostics(M_,options_,oo_)
model_diagnostic: the Jacobian of the static model is singular
there is 1 colinear relationships between the variables and the equations
Colinear variables:
e
sle_obs
Colinear equations
1 3 5 6 7 8 12 14

Thank you Costa for your suggestion. I managed to coorect it and the code is running now. I have been struggling with this problem for 2 weeks. Thank you for saving my time.

Hi,
I have the same problem with the same model. Using the comand model_diagnostic i have found one collinear relationship with e and many equation. I think the problem involve the relations of terms of trade, nominal exchange rate and real exchang rate. “sujee2sujee” how did you solve the problem of collinear relation?