Hi all,

My code is for 2 small open economies model with intermediate goods.

Running the model leads to the error posted at the end. I have repeatedly checked my model for issues and specified exp() for variables that have zero initial values wherever relevant. However, I continue to get this error. Any help would be greatly appreciated. My .mod file is attached.

STEADY: The Jacobian contains Inf or NaN. The problem arises from:

STEADY: Derivative of Equation 9 with respect to Variable Lambda1 (initial value of Lambda1: 20.6122)

STEADY: Derivative of Equation 10 with respect to Variable Lambda2 (initial value of Lambda2: 20.6122)

STEADY: Derivative of Equation 7 with respect to Variable Lambda3 (initial value of Lambda3: 1.1546)

STEADY: Derivative of Equation 8 with respect to Variable Lambda3 (initial value of Lambda3: 1.1546)

STEADY: Derivative of Equation 9 with respect to Variable A1 (initial value of A1: 0)

STEADY: Derivative of Equation 10 with respect to Variable A2 (initial value of A2: 0)

STEADY: Derivative of Equation 19 with respect to Variable c1 (initial value of c1: 0.2865)

STEADY: Derivative of Equation 19 with respect to Variable c2 (initial value of c2: 0.2865)

STEADY: Derivative of Equation 9 with respect to Variable n1 (initial value of n1: 0.3072)

STEADY: Derivative of Equation 10 with respect to Variable n2 (initial value of n2: 0.3072)

STEADY: Derivative of Equation 9 with respect to Variable k1 (initial value of k1: 0.39509)

STEADY: Derivative of Equation 10 with respect to Variable k2 (initial value of k2: 0.39509)

STEADY: Derivative of Equation 19 with respect to Variable y1 (initial value of y1: 0.2964)

STEADY: Derivative of Equation 19 with respect to Variable y2 (initial value of y2: 0.2964)

STEADY: Derivative of Equation 17 with respect to Variable x11 (initial value of x11: 0.3852)

STEADY: Derivative of Equation 17 with respect to Variable x12 (initial value of x12: 0.3852)

STEADY: Derivative of Equation 18 with respect to Variable x21 (initial value of x21: 0.3852)

STEADY: Derivative of Equation 18 with respect to Variable x22 (initial value of x22: 0.3852)

STEADY: Derivative of Equation 19 with respect to Variable I1 (initial value of I1: 0.0988)

STEADY: Derivative of Equation 19 with respect to Variable I2 (initial value of I2: 0.0988)

STEADY: Derivative of Equation 17 with respect to Variable y11 (initial value of y11: 0.7705)

STEADY: Derivative of Equation 18 with respect to Variable y22 (initial value of y22: 0.7705)

STEADY: The problem most often occurs, because a variable with

STEADY: exponent smaller than 1 has been initialized to 0. Taking the derivative

STEADY: and evaluating it at the steady state then results in a division by 0.

Error using dynare_solve (line 60)

An element of the Jacobian is not finite or NaN

Error in evaluate_steady_state (line 66)

[ys,check] = dynare_solve([M.fname '*static’],…
Error in steady* (line 54)

[steady_state,params,info] =

evaluate_steady_state(oo_.steady_state,M_,options_,oo_,~options_.steadystate.nocheck);

Error in steady (line 81)

[steady_state,M_.params,info] = steady_(M_,options_,oo_);

Error in IMG2 (line 232)

steady;

Error in dynare (line 180)

evalin(‘base’,fname) ;

IMG2.mod (3.14 KB)