Need help with error in Dynare Code - Matrix Singular

Stochastic simulations
1

I am working on a Two Sector TANK model for my thesis and have come across an error that I can’t figure out how to fix when I run my code on dynare. I am looking at the impact of different environmental policies (no policy, carbon tax, intensity target and cap and trade) on different macroeconomic variables under the Two Sector TANK setting. When I run the code taking tau_z_ss =0 in the parameters, i.e., the no policy framework, the code works and I am getting results. However, when I change it to anything other than 0 it falls apart and gives the error:

Warning: Matrix is singular to working precision.

In evaluate_steady_state (line 261)
In steady_ (line 55)
In steady (line 80)
In practice.driver (line 665)
In dynare (line 293)

Residuals of the static equations:

Equation number 1 : NaN : pi
Equation number 2 : NaN : T
Equation number 3 : NaN : w
Equation number 4 : NaN : 4
Equation number 5 : NaN : 5
Equation number 6 : NaN : X
Equation number 7 : NaN : C
Equation number 8 : NaN : C_R
Equation number 9 : NaN : Y_A
Equation number 10 : NaN : Y_M
Equation number 11 : NaN : A_M_star
Equation number 12 : NaN : Y
Equation number 13 : NaN : 13
Equation number 14 : NaN : C_A
Equation number 15 : NaN : 15
Equation number 16 : NaN : A
Equation number 17 : NaN : mc_M
Equation number 18 : NaN : N
Equation number 19 : NaN : T_N
Equation number 20 : NaN : T_tilda
Equation number 21 : NaN : w_N
Equation number 22 : NaN : 22
Equation number 23 : NaN : X_N
Equation number 24 : NaN : mc_M_tilda
Equation number 25 : NaN : pi_M
Equation number 26 : NaN : int
Equation number 27 : NaN : C_N
Equation number 28 : NaN : Y_N
Equation number 29 : NaN : Y_tilda
Equation number 30 : NaN : real_int
Equation number 31 : NaN : C_rat
Equation number 32 : NaN : N_N
Equation number 33 : NaN : Y_A_N
Equation number 34 : NaN : C_A_N
Equation number 35 : NaN : Y_M_N
Equation number 36 : NaN : C_PA
Equation number 37 : NaN : C_PM
Equation number 38 : NaN : C_RA
Equation number 39 : NaN : C_RM
Equation number 40 : NaN : Y_PA
Equation number 41 : NaN : A_M
Equation number 42 : NaN : A_A
Equation number 43 : NaN : phi
Equation number 44 : 0 : a
Equation number 45 : NaN : v
Equation number 46 : NaN : Ev
Equation number 47 : NaN : 47
Equation number 48 : NaN : 48
Equation number 49 : 0 : M
Equation number 50 : NaN : Z
Equation number 51 : 0 : U
Equation number 52 : NaN : AC

Error using print_info (line 32)
The steady state has NaNs or Inf.
Error in steady (line 102)
print_info(info,options_.noprint, options_);
Error in practice.driver (line 665)
steady;
Error in dynare (line 293)
evalin(‘base’,[fname ‘.driver’]) ;

I would appreciate any kind of help about the same. Thank you in advance for taking your time out. I have attached the code for reference

2

Hi Sreekar,

the issue comes from U_ss, which is defined right below the parameter you mentioned. The problem is that it become non-zero as soon as you deviate tau_z_ss from zero, but your second to last equation is

// {50} Abatement Level //
U = U_ss;

Since your model is log-linearized, a steady-state - and residual - different from zero is not possible.

1 Like
3

Thank you so much for your help. It worked now and I cannot thank you enough!! Hope you have a great day ahead!

4

Glad it worked :slight_smile: Good luck with your thesis.

1 Like
5

Thank you so much!