GH3.mod (4.2 KB)

GH3_ss.m (1.8 KB)

GH3_steadystate.m (1.5 KB)

GH4.mod (3.8 KB)

GH4_ss.m (1.8 KB)

GH4_steadystate.m (1.5 KB)

param_GH.m (840 Bytes)

Dear professor,

I am doing a two sector with banks. I have encountered the unit root problem. My initial model is in GH3.mod. When I remove the bank sector and the open economic setup, the model could run well in GH4.mod. However, when I add these parts in GH3.mod, the model reports colinear problem, and I could not get the var of variables. I have checked the model for numerous times and could not find where the error comes from. Could you help me to find out the problem in GH3.mod, Thanks.

How did you solve the typical unit problem in small open economy setups? See