Actually the problem is that Dynare returns an error stating that my model is not linear. On the other hand, if I exclude all the equations except the state space model, it runs perfectly fine. You can find the .mod file attached.
Thank you.
Edit: I could get the estimation running by setting
steady_state_model
However, the mode graphs are irregular. as can be seen from the graph below.
Edit 2: I think that the irregularity of the graphs might be related to the model misspecification or very tight priors. I am not done with finishing my model yet, when I do however, I will check whether the problem persists. Thanks @jpfeifer .
For now, I am removing the .mod file and will upload it along with the data file if the problem, once more, persists.