I was estimating a NK model using version 4.1.1 and got the message that led to fixing the bug in the Kalman filter code (Bug in kalman_filter.m).

Now I am running version 4.1.2 and the bug seems to be fixed, however now I get the following error message:

dynare base_est.mod

Configuring Dynare …

[mex] Generalized QZ.

[mex] Sylvester equation solution.

[mex] Kronecker products.

[mex] Sparse kronecker products.

[mex] Bytecode evaluation.

[mex] k-order perturbation solver.

[mex] k-order solution simulation.

Starting Dynare (version 4.1.2).

Starting preprocessing of the model file …

Found 10 equation(s).

Evaluating expressions…done

Computing static model derivatives:

- order 1

Computing dynamic model derivatives: - order 1
- order 2

Processing outputs …done

Preprocessing completed.

Starting MATLAB/Octave computing.

STEADY-STATE RESULTS:

ygr 0.4

infl 7

int 9.64957

y 0

yst 0

r 0

p 0

u 0

g 0

v 0

EIGENVALUES:

Modulus Real Imaginary

```
0 0 0
0.1863 0.1863 0
0.2 0.2 0
0.6 0.6 0
0.8 0.8 0
1.281 1.281 0
2.1 2.1 0
Inf -Inf 0
```

There are 3 eigenvalue(s) larger than 1 in modulus

for 3 forward-looking variable(s)

The rank condition is verified.

You did not declare endogenous variables after the estimation command.

Loading 205 observations from qdatabaseest.xls

??? Error using ==> kalman_filter at 83

The variance of the forecast error remains singular until the end of the sample

Error in ==> DsgeLikelihood at 254

LIK = kalman_filter(T,R,Q,H,Pstar,Y,start,mf,kalman_tol,riccati_tol);

Error in ==> initial_estimation_checks at 60

[fval,cost_flag,ys,trend_coeff,info] =

DsgeLikelihood(xparam1,gend,data,data_index,number_of_observations,no_more_missing_observations);

Error in ==> dynare_estimation_1 at 334

initial_estimation_checks(xparam1,gend,data,data_index,number_of_observations,no_more_missing_observations);

Error in ==> dynare_estimation at 62

dynare_estimation_1(var_list,varargin{:});

Error in ==> base_est at 176

dynare_estimation(var_list_);

Error in ==> dynare at 132

evalin(‘base’,fname) ;

Why is that the matrix is singular?

qdatabaseest.xls (38.5 KB)

base_est.mod (1.47 KB)