Hi Stéphane,

thanks a lot for your help. You are right that the size of the shocks was too large and prevents the IRFs from popping up in the second order approximation. I was not aware of this potential problem.

However, the NaNi-issue is still there. I attached the oo_-structure. As the forum does not allow .mat file endings, you have to rename the file. I could not attache the log-file as the forum software constantly told me “The upload was rejected because the uploaded file was identified as a possible attack vector.”

Apparently, NaNi only appear in the Inf-part of the generalized eigenvalues and hence do not affect the IRFs. However, the problem with the eig-routine of Matlab seems to be have been known around the internet some time ago, see student.ulb.ac.be/~claugero/index.html. However, if I try the example posted on the webpage on my machine, everything is fine, no NaNis.

This book uacg.bg/UACEG_site/acadstaff/userfiles/publ_bg_356_na-new.pdf indicates on page 176 that Matlab sometimes gives Inf as Inf+NaNi for no special reason. Maybe I shouldn’t bother, but the absolute value of a Inf+NaNi eigenvalue is NaN, so I am not sure if it leads to further trouble.

```
<a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'eqn_solved','CSHelpWindow');">Equation solved</a>.
fsolve completed because the vector of function values is near zero
as measured by the default value of the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'fcn_tolerance_fsolve','CSHelpWindow');">function tolerance</a>, and
the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'appears_regular','CSHelpWindow');">problem appears regular</a> as measured by the gradient.
<<a href = "matlab: createExitMsg('trustnleqn',1.000000e+000,true,true,'fsolve',3.453271e-013,'default',1.000000e-006,5.207715e-027,'default',1.000000e-003);">stopping criteria details</a>>
STEADY-STATE RESULTS:
d 1
c 0.40819
zprime 1.00446
lambda 2.58777
R 1.01654
PI 1.01
r 0.0348988
x 0.0884579
u 1
muprime 1.00341
q 1
f 2.55673
ld 0.317845
wstar 1.13352
w 1.11127
PIstarw 1.02002
g1 7.64784
g2 8.4976
yd 0.496648
PIstar 1.01869
mc 0.89825
k 2.71161
m 0
Aprime 1.0028
vp 1.00222
vw 1.00305
l 0.318814
phi 1
<a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'eqn_solved','CSHelpWindow');">Equation solved</a>.
fsolve completed because the vector of function values is near zero
as measured by the default value of the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'fcn_tolerance_fsolve','CSHelpWindow');">function tolerance</a>, and
the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'appears_regular','CSHelpWindow');">problem appears regular</a> as measured by the gradient.
<<a href = "matlab: createExitMsg('trustnleqn',1.000000e+000,true,true,'fsolve',3.453271e-013,'default',1.000000e-006,5.207715e-027,'default',1.000000e-003);">stopping criteria details</a>>
EIGENVALUES:
Modulus Real Imaginary
1.704e-014 -1.704e-014 0
0.12 0.12 0
0.627 0.627 0
0.7383 0.7383 0
0.7717 0.769 0.06453
0.7717 0.769 -0.06453
0.8609 0.8608 0.0135
0.8609 0.8608 -0.0135
0.93 0.93 0
0.9679 0.9679 0
0.9866 0.9866 0
1.017 1.012 0.0962
1.017 1.012 -0.0962
1.027 1.027 0.006791
1.027 1.027 -0.006791
1.039 1.039 0
1.123 1.123 0
1.245 1.245 0
1.446 1.446 0
Inf Inf 0
Inf Inf 0
Inf Inf 0
Inf Inf 0
Inf Inf 0
Inf Inf 0
Inf -Inf 0
There are 15 eigenvalue(s) larger than 1 in modulus
for 15 forward-looking variable(s)
The rank condition is verified.
<a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'eqn_solved','CSHelpWindow');">Equation solved</a>.
fsolve completed because the vector of function values is near zero
as measured by the default value of the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'fcn_tolerance_fsolve','CSHelpWindow');">function tolerance</a>, and
the <a href = "matlab: helpview([docroot '/toolbox/optim/msg_csh/optim_msg_csh.map'],'appears_regular','CSHelpWindow');">problem appears regular</a> as measured by the gradient.
<<a href = "matlab: createExitMsg('trustnleqn',1.000000e+000,true,true,'fsolve',3.453271e-013,'default',1.000000e-006,5.207715e-027,'default',1.000000e-003);">stopping criteria details</a>>
MODEL SUMMARY
Number of variables: 28
Number of stochastic shocks: 5
Number of state variables: 11
Number of jumpers: 15
Number of static variables: 6
MATRIX OF COVARIANCE OF EXOGENOUS SHOCKS
Variables epsd epsphi epsmu epsA epsm
epsd 0.000000 0.000000 0.000000 0.000000 0.000000
epsphi 0.000000 0.000000 0.000000 0.000000 0.000000
epsmu 0.000000 0.000000 0.000000 0.000000 0.000000
epsA 0.000000 0.000000 0.000000 0.000000 0.000000
epsm 0.000000 0.000000 0.000000 0.000000 0.000000
POLICY AND TRANSITION FUNCTIONS
yd R r PI
Constant 0.496648 1.016536 0.034899 1.010000
R(-1) -0.104721 0.746975 -0.000274 -0.045738
w(-1) 0.045136 0.020074 0.000638 0.053702
yd(-1) 0.012165 -0.086770 0.000032 0.005313
k(-1) -0.039592 -0.004256 -0.000440 -0.002393
vp(-1) 0.092814 0.010669 0.001028 0.007926
phi(-1) -0.008700 0.002324 0 0.010389
d(-1) 0.001988 0.000224 0.000004 0.000154
c(-1) 1.131161 0.117028 0.002283 0.053082
PI(-1) -0.057558 0.171244 -0.000164 0.590690
x(-1) 1.157886 0.120785 0.002352 0.057660
epsd 0.016569 0.001865 0.000037 0.001284
epsphi -0.009354 0.002499 0 0.011171
epsmu -0.029008 0.004595 0.001016 -0.015468
epsA -0.649361 -0.033072 -0.000850 -0.104553
epsm -0.138250 0.986139 -0.000361 -0.060382
```

Again, thanks a lot for your help,

Johannes

BaselineDSGE_results.m (12.3 KB)