Error: Steady state has NaNs or Inf

Steady state
1

Dear all:

I am failry new to dynare and I have the following problem that leads to the error: The Steady state has NaNs or Inf.

If I run the following:

nu      = nubar+(1-del)*nu(-1)+c*Gov^mu;
Gov     = (c*mu*d*exp(-d*H)*R^omeg*Cg)^(1/(1-mu));

The code results in the error message.

Note c = 0. Hence, Gov = 0 for all periods and the first equation could be simplified to

nu      = nubar+(1-del)*nu(-1)

c will be different from 0 at some point but first I need to figure out why the model fails.

If I use this simplification and run the following:

nu      = nubar+(1-del)*nu(-1);
Gov     = (c*mu*d*exp(-d*H)*R^omeg*Cg)^(1/(1-mu));

Then dynare is able to compute the steady state of the model.

Does anyone have an idea why this happens?

If needed, I can upload the whole model.

Thank you.

2

If Gov=0, you will have an issue with Gov^mu if mu is negative, because you will be dividing by 0.

3

Thank you!

To add on your reply: Is it possible that mu can neither be mu<1. As the first derivative would become an issue due to dividing by 0?

If this is true, I guess I’ll have to find either another functional form or method to calculate the steady state.

4

Yes, that would be an issue for the Jacobian.