Hi everyone,

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)

steady;

Error in dynare (line 180)

evalin(‘base’,fname) ;

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.

Nicole

small edit: typo!

MODEL_4.mod (1.02 KB)

MODEL_5.mod (881 Bytes)