I am working on a two-country model with entry/exit like Ghironi and Melitz (qje, 2005). I’m now trying to compute a deterministic transition path betwee two steady-states. I have already obained two steady-states for different parameter values. In both steady-states, the number of eigenvalues is equal to that of forward looking variables, and the rank condition is verified.
However, when I try to compute a deterministic transition between the two steady states by “simul”, I have the following error:
Warning: Matrix is singular to working precision.
In siml at 75
In simul at 93
In model9 at 664
In dynare at 120
I first thought that the distance between the two steady-states is too large, but even when the two steady-states are very close each other, I have the same error. So my question is what kind of mistakes causes such an error message? I tried many parameter values, but it did not work.