Dear professor jpfeifer:

When we run the modeltwo.mod file in dynare, the error information is coming up with the following message:

………

model_diagnostic: the Jacobian of the static model is singular

there is 5 colinear relationships between the variables and the equations

Relation 1

Colinear variables:

C_d

C_i

C_fd

C_md

C_fi

C_mi

gama_dc

gama_ic

gama_md

gama_fd

gama_fi

gama_mi

gama_estr

k

i

Y_oil

Y_Fd

L_f

K_f

rer

x

si

T

t_d

y

im

fr

Relation 2

Colinear variables:

C_d

C_fd

C_md

gama_dc

gama_md

gama_fd

Relation 3

Colinear variables:

C_d

C_i

C_fd

C_md

C_fi

C_mi

gama_dc

gama_ic

gama_md

gama_fd

gama_fi

gama_mi

gama_estr

k

i

Y_oil

Y_Fd

L_f

K_f

rer

x

si

T

t_d

y

im

fr

Relation 4

Colinear variables:

C_d

C_i

C_fd

C_md

C_fi

C_mi

gama_dc

gama_ic

gama_md

gama_fd

gama_fi

gama_mi

gama_estr

k

i

Y_oil

Y_Fd

L_f

K_f

rer

x

si

T

t_d

y

im

fr

Relation 5

Colinear variables:

C_d

C_i

C_fd

C_md

C_fi

C_mi

gama_dc

gama_ic

gama_md

gama_fd

gama_fi

gama_mi

gama_estr

k

i

Y_oil

Y_Fd

L_f

K_f

rer

x

si

T

t_d

y

im

fr

Relation 1

Colinear equations

Columns 1 through 18

```
2 4 6 8 10 12 13 14 15 16 18 19 20 21 27 32 33 34
```

Columns 19 through 27

```
35 36 37 38 39 40 49 51 52
```

Relation 2

Colinear equations

Columns 1 through 18

```
2 4 6 8 10 12 13 14 15 16 18 19 20 21 27 32 33 34
```

Columns 19 through 27

```
35 36 37 38 39 40 49 51 52
```

Relation 3

Colinear equations

Columns 1 through 18

```
2 4 6 8 10 12 13 14 15 16 18 19 20 21 27 32 33 34
```

Columns 19 through 27

```
35 36 37 38 39 40 49 51 52
```

Relation 4

Colinear equations

Columns 1 through 18

```
2 4 6 8 10 12 13 14 15 16 18 19 20 21 27 32 33 34
```

Columns 19 through 27

```
35 36 37 38 39 40 49 51 52
```

Relation 5

Colinear equations

Columns 1 through 18

```
2 4 6 8 10 12 13 14 15 16 18 19 20 21 27 32 33 34
```

Columns 19 through 27

```
35 36 37 38 39 40 49 51 52
```

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.

Error using print_info (line 42)

Blanchard Kahn conditions are not satisfied: no stable equilibrium

Error in stoch_simul (line 98)

print_info(info, options_.noprint, options_);

Error in modeltwo (line 841)

info = stoch_simul(var_list_);

Error in dynare (line 180)

evalin(‘base’,fname) ;

In generally, how do we to solve the Colinear equations problems?

Thank you much for your help and support!

The mod file as follows:

Modeltwo.mod (10.7 KB)