I have a question regarding the model I’m running (MODEL_5). When running this small and rather simple model, I get the following error:
*STEADY: The Jacobian contains Inf or NaN. The problem arises from:
STEADY: Derivative of Equation 1 with respect to Variable pi (initial value of pi: 0)
STEADY: The problem most often occurs, because a variable with
STEADY: exponent smaller than 1 has been initialized to 0. Taking the derivative
STEADY: and evaluating it at the steady state then results in a division by 0.
Error using dynare_solve (line 60)
An element of the Jacobian is not finite or NaN
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 MODEL_gali_gertler (line 130)
Error in dynare (line 180)
Hence, the problem is in the first equation - x, for the output gap. However, if I run another model (MODEL_4) that includes the same equation for x, I do not get this error. Can someone help me find the difference that is causing this? I’m aware there is quite a difference in the equation for inflation (pi), but is that really causing the issue?
In case you spot anything else I might be overlooking in my .mod file, I’d love to hear. Still learning!
Thank you in advance for your time & help.