Dynare.mod (6.4 KB)

Dear professor, and colleagues

I am working on SOE with informality, and I am facing the following error:

""There are 1 eigenvalue(s) larger than 1 in modulus

for 1 forward-looking variable(s)

The rank condition is verified.

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:

FRR

Colinear equations

28 29

MODEL_DIAGNOSTICS: The singularity seems to be (partly) caused by the presence of a unit root

MODEL_DIAGNOSTICS: as the absolute value of one eigenvalue is in the range of ±1e-6 to 1.

MODEL_DIAGNOSTICS: If the model is actually supposed to feature unit root behavior, such a warning is expected,

MODEL_DIAGNOSTICS: but you should nevertheless check whether there is an additional singularity problem.

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.“”

The 28, 29 equations are the price and inflation of informality.

I checked the model many times, and it is reduced from 5 colinear relationship to one, I changed the informal wage equation, but problem still exist, also the mentioned equation of FRR, I cannot see or fined what is the problem with .

Also what about the EULER equation, when I added the colinear problem become more complicated.

Thanks so much in advance, I am waiting for your help because it took time and effort.