I am practicing Dynare and have written a simple two country model subject to quality shocks (see code attached). I get the following error message:
“Error using eig
Input to EIG must not contain NaN or Inf.”
Could anyone advise what is wrong with the code? Thank you very much in advance.
How come your model is purely backward-looking? Also, it has a singularity problem.
What you mean by a singularity problem? Is it a problem that the model is purely backward-looking?
model_diagnostics provides you with a message about collinearity. I don’t think that has necessarily to do with the backward-looking nature of your model, but it is hard to tell.