Dear all,

I am trying to replicate a simple model for a small open economy, including oil price schocks. The original .mod file I using as a base has a model (linear) block, since all equations were manually log-linearized before inputing them into matlab, and it runs. As for my model (bruna.mod, attached), since I did not want to manually linearize and compute the steady state, the model block has non-linear equations. The data file is also available below.

When I try to estimate, I get the following errors:

dynare_estimation_init:: The steady state at the initial parameters cannot be computed.

Error using print_info (line 90)

The steady state contains NaN or Inf

Error in dynare_estimation_init (line 565)

print_info(info, 0, options_);

Error in dynare_estimation_1 (line 116)

dynare_estimation_init(var_list_, dname, [], M_, options_, oo_, estim_params_, bayestopt_);

Error in dynare_estimation (line 105)

dynare_estimation_1(var_list,dname);

Error in tesebm2020 (line 566)

oo_recursive_=dynare_estimation(var_list_);

Error in dynare (line 235)

evalin(‘base’,fname) ;

Could someone please help to understand how do I put a code for Dynare to perform the linearization and find the correct steady states?

Thank you in advance,

Best,

Bruna

bruna.mod.mod (9.3 KB)

dados_dynare_18abril.xls (56.5 KB)

In Dynare 4.6.1 I get

```
Error: w_nom not used in the model block
```

Dear Dr Pfeifer,

Thank you very much for your help. You are correct. I just removed this variable since it was not included in the model, and made some other adjustments in the model. Please find attached the corrected version (bruna2.mod (9.1 KB)

Still, I got the same error:

dynare_estimation_init:: The steady state at the initial parameters cannot be computed.

Error using print_info (line 90)

The steady state contains NaN or Inf

Error in dynare_estimation_init (line 565)

print_info(info, 0, options_);

Error in dynare_estimation_1 (line 116)

dynare_estimation_init(var_list_, dname, [], M_, options_, oo_, estim_params_, bayestopt_);

Error in dynare_estimation (line 105)

dynare_estimation_1(var_list,dname);

Error in tesebm2020 (line 548)

oo_recursive_=dynare_estimation(var_list_);

Error in dynare (line 235)

evalin(‘base’,fname) ;

Do you have any idea of what is missing or is wrong? I am not sure if I ordered Dynare to “linearize the model and find the steady state for me”, which is what I intented to. I read in the Dynare manual about functions “initvals” or “steady”, but I don’t know if I need to use them and if so where exactly to put it in the code.

Thank you very much.

Best,

Bruna

Dear Dr Pfeifer,

Thank you very much for your valuable help.

- I ended up log-linearizing the model, so there was no need for initial values
- I did run a simulated version, thank you for that tip, it did help
- There were lots of little mistakes in the equations, thank you for this tip too.

Best regards,

Bruna