Model_diagnostics Error

General DSGE Modeling Macroeconomic Model Data Base
1

Hi Prof. Pfeifer,
I want to replicate in Dynare 4.4.3 the model from the article Pau Rabanal
"Inflation Differentials Between Spain and the EMU: A DSGE Perspective "
(https://github.com/IMFS-MMB/mmb-rep/tree/master/EAES_RA09).
But diagnosing the model using model_diagnostics I get a message:
model_diagnostic: the Jacobian of the static model is singular
there is 2 colinear relationships between the variables and the equations
Relation 1
Colinear variables:
mu
c
mu_star
c_star
rer
t_N
t_H
t_F
t_T
t_N_star
t_H_star
t_F_star
t_T_star
c_H
c_F
c_N
c_H_star
c_F_star
c_N_star
l
w
l_star
w_star
l_N
l_T
l_N_star
l_T_star
y_N
y_H
y_N_star
y_F_star
y
y_star
Relation 2
Colinear variables:
mu_star
c_star
rer
t_N
t_H
t_F
t_T
t_N_star
t_H_star
t_F_star
t_T_star
c_H
c_F
c_N
c_H_star
c_F_star
c_N_star
l
w
l_star
w_star
l_N
l_T
l_N_star
l_T_star
y_N
y_H
y_N_star
y_F_star
y
y_star
Relation 1
Colinear equations
26 28 29 32 34 35
Relation 2
Colinear equations
26 28 29 32 34 35
The presence of a singularity problem typically indicates that there is one
redundant equation entered in the model block, while another non-redundant equation
is missing. The problem often derives from Walras Law.
Total computing time : 0h00m16s.

Where is the error? Help me please.
Thank you, Leonid

2

Did you simply take their code? Or did you change something?

3

Hi Prof. Pfeifer,
No, I did not change their code.
Thank you, Leonid.

4

If you use a newer version, Dynare will tell you that the message comes from a unit root. That is typically not a problem

5

Thank you, Johannes!

6

Hi Prof. Pfeifer,
Has You an idea of the origin of the unit root in this model (https://github.com/IMFS-MMB/mmb-rep/tree/master/EAES_RA09 )l?
In the model, all prices are relative and there are no synchronization errors.
I would appreciate if You can help in finding what is wrong with it.
Thank you in advance

7

As I said, I don’t know whether anything is wrong the model. It an simply be a feature of the model. But I don’t know the paper, so I can’t tell.

8

Thank you, Johannes!