Error when computing the model without shocks

Good afternoon,

I’m running a file based in the Jermann and Quadrini (2012) model to compute the macroeconomic effects of financial shocks. There are two shocks in this model: a productivity and a financial shock. When I run the simulation including the two shocks simultaneously (set: “shocks; var ez = 1; var exi = 1; end;”) everything goes fine, but when I do it to simulate the without shocks (var ez = 0; var exi = 0), the following message is reported in the output:


??? Error using ==> ones
NaN and Inf not allowed.

Error in ==> dyntable at 58
hh = hh char(32*ones(1,hlb)) deblank(headers(i,:)) …

Error in ==> disp_moments at 97

Error in ==> stoch_simul at 154

Error in ==> model0 at 190
info = stoch_simul(var_list_);

Error in ==> dynare at 120
evalin(‘base’,fname) ; "

I’ve already checked the residuals of the model to see if the initial values are correct, and the values are quite close to zero, so I think that it is not a problem in the specification of the equations:

Residuals of the static equations:

Equation number 1 : 0
Equation number 2 : 0
Equation number 3 : 0
Equation number 4 : 3.9724e-005
Equation number 5 : -0.00011285
Equation number 6 : -4.1724e-005
Equation number 7 : 5.3124e-005
Equation number 8 : -5.3029e-005
Equation number 9 : 4.5273e-006
Equation number 10 : 2.7958e-005
Equation number 11 : -4.8988e-005
Equation number 12 : -1.095e-005
Equation number 13 : 2.2356e-006

I would be very grateful if anyone can help me to identify what is the problem behind this. What I really want to know is what is wrong with my model and what can I do to simulate the model without the shocks. Thank very much in advance for your help, I’m a little desperate!

Best regards,


PS: I attached the mod.file for a closer inspection
model0.mod (1.76 KB)

What do you mean? Simulating the model without shocks means the system always is in steady state.