Dear professor and everyone,
Here I run my Dynare code for Two country NK model, with both wage and price rigidities. I encounter the problem of collinearity (I attached the mod file). Dynare finds four colinear relationships. I know that to eliminate these I need to drop 4 equations and 4 variables, or find another four equations. However I think I have included all FOCs, definitions and equilibrium conditions. Hope some of you can help me out.
Thanks a lot!
TANK.mod (17.2 KB)