See attached model file. When I try to run Dynare with stoch_simul I get there error:
??? Error using ==> dr1 at 223
2nd and 3rd order approximation not implemented for purely backward models
When I use stoch_simul(order=1) instead, I get:
??? Error using ==> eig
Input to EIG must not contain NaN or Inf.
Does anybody know what could be wrong with my model file? Thanks.
model.mod (2.16 KB)
There is a problem with your model: the jacobian is singular at the steady state.
Thanks for the reply. This may not be the proper forum to ask this, but I’m just an undergraduate and could use some help if this can be answered fairly simply. Is it possible to tell easily what about my model is making the Jacobian singular in the steady state? Also, what does this mean intuitively about the nature of my model in the steady state? Can I fix this without drastically changing my model? I would greatly appreciate any help.