I get an error when I try to use the Gali 2015 (that professor Johannes has posted as chap 3 mod).

The errors occur when I try to add deposit fee to the model.

I am trying to add CBDC, deposit fee and exchange rate. But I started with deposit fee. The errors I get are the following… NaN for FOC labor eq, and real wage definition, nominal money stock. All of which were in the Gali 2015 code.

Can you please help me find the issue?

Residuals of the static equations:

Equation number 1: New Keynesian Phillips Curve eq. (22) : 0.000000

Equation number 2: Dynamic IS Curve eq. (23) : 0.000000

Equation number 3: Interest Rate Rule eq. (26) : 0.000000

Equation number 4: Definition natural rate of interest eq. (24) : 0.000000

Equation number 5: Definition real interest rate : 0.000000

Equation number 6: Definition natural output, eq. (20) : 0.000000

Equation number 7: Definition output gap : 0.000000

Equation number 8: Monetary policy shock : 0.000000

Equation number 9: TFP shock : 0.000000

Equation number 10: Production function (eq. 14) : 0.000000

Equation number 11: Preference shock, p. 54 : 0.000000

Equation number 12: Money growth (derived from eq. (4)) : 0.000000

Equation number 13: Real money demand (eq. 4) : 0.000000

Equation number 14: Annualized nominal interest rate : 0.000000

Equation number 15: Annualized real interest rate : 0.000000

Equation number 16: Annualized natural interest rate : 0.000000

Equation number 17: Annualized inflation : 0.000000

Equation number 18: Output deviation from steady state : 0.000000

Equation number 19: Definition price level : 0.000000

Equation number 20: resource constraint, eq. (12) : 0.000000

Equation number 21: FOC labor, eq. (2) : 0.000000

Equation number 22: definition real wage : 0.000000

Equation number 23: definition nominal money stock : 0.000000

Equation number 24: average price markup, eq. (18) : 0.000000

Equation number 25: average price markup, eq. (20) : 0.000000

Equation number 26: deposit fee : 3.000000

Warning: Matrix is singular to working precision.

In evaluate_steady_state (line 339)

In steady (line 112)

In Gali.driver (line 567)

In dynare (line 310)

Residuals of the static equations:

Equation number 1: New Keynesian Phillips Curve eq. (22) : 0.000000

Equation number 2: Dynamic IS Curve eq. (23) : 0.000000

Equation number 3: Interest Rate Rule eq. (26) : 0.000000

Equation number 4: Definition natural rate of interest eq. (24) : 0.000000

Equation number 5: Definition real interest rate : 0.000000

Equation number 6: Definition natural output, eq. (20) : 0.000000

Equation number 7: Definition output gap : 0.000000

Equation number 8: Monetary policy shock : 0.000000

Equation number 9: TFP shock : 0.000000

Equation number 10: Production function (eq. 14) : 0.000000

Equation number 11: Preference shock, p. 54 : 0.000000

Equation number 12: Money growth (derived from eq. (4)) : 0.000000

Equation number 13: Real money demand (eq. 4) : 0.000000

Equation number 14: Annualized nominal interest rate : 0.000000

Equation number 15: Annualized real interest rate : 0.000000

Equation number 16: Annualized natural interest rate : 0.000000

Equation number 17: Annualized inflation : 0.000000

Equation number 18: Output deviation from steady state : 0.000000

Equation number 19: Definition price level : 0.000000

Equation number 20: resource constraint, eq. (12) : 0.000000

Equation number 21: FOC labor, eq. (2) : NaN

Equation number 22: definition real wage : NaN

Equation number 23: definition nominal money stock : NaN

Equation number 24: average price markup, eq. (18) : 0.000000

Equation number 25: average price markup, eq. (20) : 0.000000

Equation number 26: deposit fee : 0.000000

Error using print_info (line 33)

The steady state has NaNs or Inf.

Error in steady (line 143)

print_info(info,options_.noprint, options_);

Error in Gali.driver (line 567)

steady;

Error in dynare (line 310)

evalin(‘base’,[fname ‘.driver’]);