Identifying a Collinearity Issue


I have been unable to figure out exactly what is going wrong with my model. My mod file is attached. I am not sure if it is easy to detect without knowing the economic intuition behind the model. Basically, this is similar to Benigno and Nistico (2015) with a fiscal government and a central bank. The central bank equations (which are the second block in the model equations section) is where the issue comes in. I am not quite sure why the Euler equation(1), the Taylor rule(7) (where I am pegging the short-term interest rate) and the CB net worth law of motion (19) are collinear. I know I am missing something that is probably very obvious, but I would appreciate it if I can get some help with identifying the exact issue.

Thanks a lot
modfile.mod (2.63 KB)

The collinearity is related to the unit root in your model. Without knowing the type of model, it is hard to know what is going on.
It is not clear whether this unit root is the reason for the failuar of the BK conditions. Some models feature a unit root (e.g. many small open economy models without features to stationarize the net asset position). In that case, the error you get may be related to a timing error somewhere else.