I am solving a deterministic growth model with two capital goods. I wrote a matlab code to solve the steady state and a dynare code to solve the transition after a permanent shock. My dynare code get the same steady state as my matlab code. However, the transition path failed with “Warning: Matrix is close to singular or badly scaled. Results may be inaccurate. RCOND = 2.002503e-52.”

## I then put check after command steady and it gives:

EIGENVALUES:

Modulus Real Imaginary

```
0.9696 0.9696 0
1.064 1.064 0
Inf Inf 0
Inf Inf 0
Inf Inf 0
```

There are 4 eigenvalue(s) larger than 1 in modulus

for 3 forward-looking variable(s)

The rank condition ISN’T verified!

mod file is attached. could someone please help me? Thanks.

main_dynare.mod (1.27 KB)