Error in Estimation Log-Linearized Model

Dynare help (legacy posts)
1

Hi. I am trying to replicate a model by Rabanal (2005) which is written in log-linearized form, however, I get into this error:

??? Error using ==> lnsrch1 at 53
Some element of Newton direction isn’t finite. Jacobian maybe singular or there is a
problem with initial values

Error in ==> solve1 at 127
[x,f,fvec,check]=lnsrch1(xold,fold,g,p,stpmax,func,j1,j2,varargin{:});

Error in ==> dynare_solve at 124
[x,info]=solve1(func,x,j1(r(i):r(i+1)-1),j2(r(i):r(i+1)-1),jacobian_flag,
bad_cond_flag, varargin{:});

Error in ==> steady_ at 120
[oo_.steady_state,check] = dynare_solve([M_.fname ‘_static’],…

Error in ==> steady at 54
steady_;

Error in ==> modelopen at 310
steady;

Error in ==> dynare at 132
evalin(‘base’,fname) ;

I did not specify steady state values as they are zero automatically; what could be the issue? Attached is the Mod-file.
Thank you for your attention.
modelopen.mod (3.72 KB)

2

If you put

resid(1);

before steady; you will see that the problem is equation 27:

Its steady state is obviously g. Hence, there is still an issue with the model.

3

Thank you so much for your help! I managed to work things out with my model.