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.