Get a close to 0/0 eigenvalue

Dynare help (legacy posts)
1

Hi all,

I am trying to replicate the results of the paper " A Small Open Economy DSGE Model for Pakistan " by ADNAN HAIDER AND SAFDAR ULLAH KHAN (2008) ,I have written the codes for this paper which are attached below. However, when I run it I get the following errors:
*Error using print_info (line 54)
One of the eigenvalues is close to 0/0 (the absolute value of numerator and
denominator is smaller than 1e-06!
If you believe that the model has a unique solution you can try to reduce
the value of qz_zero_threshold.

Error in check (line 76)
print_info(info, 0, options);

Error in dsgeforpak (line 248)
oo_.dr.eigval = check(M_,options_,oo_);

Error in dynare (line 180)
evalin(‘base’,fname) ;
*

I also attach the paper,I would appreciate any help on this matter

Thanks
dsgeforpak.mod (1.82 KB)
a small open dsge model for pakistan.pdf (606 KB)

2

model_diagnostics says:

[quote]MODEL_DIAGNOSTICS: The Jacobian of the static model is singular
MODEL_DIAGNOSTICS: there is 1 colinear relationships between the variables and the equations
Colinear variables:
rstar
pistar
Colinear equations
4 6 12

MODEL_DIAGNOSTICS: The presence of a singularity problem typically indicates that there is one
MODEL_DIAGNOSTICS: redundant equation entered in the model block, while another non-redundant equation
MODEL_DIAGNOSTICS: is missing. The problem often derives from Walras Law.[/quote]

Looking at the appendix of the paper, there is a timing issue in equations 7 and 12 of Table B2. You need to fix that. Currently, it seems that only the foreign real return is determined, but not the individual components.

3

Thanks Mr. Pfeifer.I fixed the timing issue,(change line 61 rstar-pistar(+1)=rhor*(rstar(-1)-pistar)+epsilonrs; to rstar-pistar(+1)=rhor*(rstar-pistar)+epsilonrs;,but the following message pops up:
EIGENVALUES:
Modulus Real Imaginary

           0               -0                0
   8.814e-18        8.814e-18                0
      0.3978           0.2736           0.2888
      0.3978           0.2736          -0.2888
      0.4284           0.4284                0
         0.5              0.5                0
         0.5              0.5                0
         0.5              0.5                0
      0.5255           0.3888           0.3535
      0.5255           0.3888          -0.3535
       1.252            1.252                0
       2.972            2.972                0
       4.063            4.063                0
         Inf             -Inf                0
         Inf             -Inf                0

There are 5 eigenvalue(s) larger than 1 in modulus
for 6 forward-looking variable(s)

The rank condition ISN’T verified!

Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);

Error in dsgeforpak (line 256)
info = stoch_simul(var_list_);

Error in dynare (line 180)
evalin(‘base’,fname) ;

4

You most probably did not correct the timing as there still is a problem with the BK conditions. You just tweaked it so that another error arises. There is only one economically correct timing and you need to find it.