Error in computing likelihood for initial parameter values

Dynare help (legacy posts)
1

I’m estimating the SW2007 model with a slight alteration to the consumption equation. To obtain the new parameters for this alternation, I just estimated a simple OLS regression and used the coefficients from that as parameter values. However, when I run the model in Dynare, I get the following error:

Error in computing likelihood for initial parameter values
??? Error using ==> print_info at 49
The Jacobian matrix evaluated at the steady state contains elements that are not real or are
infinite

Error in ==> initial_estimation_checks at 101
print_info(info, options_.noprint)

Error in ==> dynare_estimation_1 at 122
initial_estimation_checks(xparam1,gend,data,data_index,number_of_observations,no_more_missing_observations);

Error in ==> dynare_estimation at 62
dynare_estimation_1(var_list,varargin{:});

Error in ==> test_wealth at 516
dynare_estimation(var_list_);

Error in ==> dynare at 120
evalin(‘base’,fname) ;

49 error('The Jacobian matrix evaluated at the steady state contains elements ’ …

I have tried altering the initial parameter values, but it still makes no difference. Would I need to estimate an external steady state file? Or is there anything that I could do to get the model to run.

The .mod file is attached.

Thanks for your help.
Sashe86
test_wealth.mod (8.69 KB)

2

It seems that you are using an old version of the Smets Wouters file that is only compatible with Dynare 3. For an updated version that should work, see [Smets/Wouters (2007) in Dynare 4.2.5)

3

Hi jpfeifer,

Thanks for your reply. I still get the same error with the updated version of the SW model. Also, I obtained this code from the Macro Model Database.

Is there anything else that could be causing this specific error?

Also note, before I got the error in computing likelihood for initial parameter values, I got a different error which said “To use an external function within the model block, you must first declare it via the external_function() statement.”

Thanks.

4

Always post the updated files that produce the error.

5

Hi jpfeifer,

I’ve attached the .mod file and dataset I am working with, if you could take a look. I’ve spent alot of time trying to sort through the error messages, so once I have fixed on error, I end up with a new error. The final error I have is:

??? Error using ==> print_info at 36
The generalized Schur (QZ) decomposition failed. For more information,
see the documentation for Lapack function dgges: info=36, n=36

Error in ==> initial_estimation_checks at 101
print_info(info, options_.noprint)

Error in ==> dynare_estimation_1 at 122
initial_estimation_checks(xparam1,gend,data,data_index,number_of_observations,no_more_missing_observations);

Error in ==> dynare_estimation at 62
dynare_estimation_1(var_list,varargin{:});

Error in ==> trial_1808_1 at 463
dynare_estimation(var_list_);

Error in ==> dynare at 120
evalin(‘base’,fname) ;

and this error is associated with the .mod file I have attached. I have tried using model_diagnostics, but I don’t think I’m using it correctly.

Anyway, I really appreciate your help, and very sorry for all the questions.

Thanks,
SAshe86
Details 2.zip (13.2 KB)

6

You added the equation

but this equation is clearly not linear.