I am trying to simulate Rubio’s ‘House rental versus Purchase: Theory and Evidence’ paper. This is a Iacoviello type model but with the extension of the rental paper.

When I attempt to simulate the model, I obtain this error message:

Error using svd
Input to SVD must not contain NaN or Inf.

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

STEADY: Derivative of Equation 12 with respect to Variable n_s (initial value of n_s: 0)
STEADY: Derivative of Equation 12 with respect to Variable n_b (initial value of n_b: 0)
STEADY: Derivative of Equation 16 with respect to Variable r_steady (initial value of r_steady: 0)

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.[/quote]

Thank you very much for responding jpfeifer. When I re-enter the initial values as 1 for the variables in question, I continue to get this problem that I’ve had since the beginning:

‘Impossible to find the steady state. Either the model doesn’t have a steady state, there
are an infinity of steady states, or the guess values are too far from the solution’

From my model can you identify how I can fix this. I have attached a new mod file.

Really appreciate the help you’ve given me. Thank you rent_lin_new.mod (3.92 KB)