Hello,

I am trying to simulate a shock to the money supply in a new Keynesian model. It is essentially what gali does in chapter 3 of his book. Every time I do this I get the following error;

Error using lnsrch1 (line 53)

Some element of Newton direction isn’t finite. Jacobian maybe

singular or there is a problem with initial values

Error in solve1 (line 129)

[x,f,fvec,check]=lnsrch1(xold,fold,g,p,stpmax,func,j1,j2,varargin{:});

Error in dynare_solve (line 130)

[x,info]=solve1(func,x,j1(r(i):r(i+1)-1),j2(r(i):r(i+1)-1),jacobian_flag,

bad_cond_flag, varargin{:});

Error in evaluate_steady_state (line 66)

[ys,check] = dynare_solve([M.fname '*static’],…
Error in steady* (line 54)

[steady_state,params,info] =

evaluate_steady_state(oo_.steady_state,M_,options_,oo_,~options_.steadystate.nocheck);

Error in steady (line 81)

[steady_state,M_.params,info] = steady_(M_,options_,oo_);

Error in econ924_dynare_example (line 188)

steady;

Error in dynare (line 120)

evalin(‘base’,fname) ;

has anyone any idea why this might be?

BNKMoney.mod (4.28 KB)