# Occasionally binding constraints of debt limit in FTPL model

**URL:** <https://forum.dynare.org/t/occasionally-binding-constraints-of-debt-limit-in-ftpl-model/27038>\
**Category:** Occbin\
**Created:** [14 January 2025 10:07 UTC](https://forum.dynare.org/t/occasionally-binding-constraints-of-debt-limit-in-ftpl-model/27038 "2025-01-14T10:07:34Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![zhuzixiang](https://forum.dynare.org/user_avatar/forum.dynare.org/zhuzixiang/32/20461_2.png) [@zhuzixiang](https://forum.dynare.org/u/zhuzixiang)\
**Post date:** [14 January 2025 10:07 UTC](https://forum.dynare.org/t/occasionally-binding-constraints-of-debt-limit-in-ftpl-model/27038/1 "2025-01-14T10:07:35Z")

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Dear Pro.  
I have written a new Keynesian model that introduces fiscal policy. I introduced the government debt limit in the model, which means that the debt to output ratio must be less than a threshold. The impulse response indicates that government spending shocks cause deficits and an increase in the debt to output ratio. My model can be solved normally when the debt limit constraint is not binding. However, when binding constraints, the model cannot be solved properly, so the impulse response under the piecewise linear model cannot be obtained. In Dynare 6.2, the program error is:

Warning: The matrix is close to singular value, or scaled incorrectly. Results may not be accurate. RCOND = NaN.

> 位置：occbin.mkdatap\_anticipated\_dyn (第 100 行)  
> 位置: occbin.solve\_one\_constraint (第 190 行)  
> 位置: occbin.solver (第 84 行)  
> 位置: NK\_Occbin.driver (第 2534 行)  
> 位置: dynare (第 308 行)  
> [definitions1.mod](https://forum.dynare.org/uploads/short-url/zxEIasNT9kaWT6C7FJUCOKOz89H.mod) (716 Bytes)  
> [definitions2.mod](https://forum.dynare.org/uploads/short-url/67uSZhkCJvOXHUFBc1UW7b8ydD8.mod) (236 Bytes)  
> [NK\_Occbin.mod](https://forum.dynare.org/uploads/short-url/d4lA1EOldgQrKvwB1AFyhgMFS3T.mod) (26.5 KB)  
> [NK\_Occbin\_steadystate.m](https://forum.dynare.org/uploads/short-url/sHaYfn8yzgNyKOEey0ewWkHYsQU.m) (2.0 KB)  
> [param\_NK.m](https://forum.dynare.org/uploads/short-url/spO1OmC8rawM5OjJuxbLdb0BAHl.m) (7.4 KB)  
> [ps2pn\_function.m](https://forum.dynare.org/uploads/short-url/8JTWrvtkXqk0TTWKNBWh7V3ZXLr.m) (149 Bytes)  
> [run\_irf\_Occbin.m](https://forum.dynare.org/uploads/short-url/fzO6vPKGTP9dLXefyINKOrm9E6q.m) (3.7 KB)  
> [SS\_LS1\_aux.m](https://forum.dynare.org/uploads/short-url/9ckSzbhOnuD0zWINW1r33BDneVc.m) (430 Bytes)

位置: run\_irf\_Occbin (第 106 行)

The following are my program attachments, the main program is run\_irf\_occbin.m.

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [14 January 2025 15:38 UTC](https://forum.dynare.org/t/occasionally-binding-constraints-of-debt-limit-in-ftpl-model/27038/2 "2025-01-14T15:38:34Z")

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From what I can see, `Lambda` is never set in the bind regime, hence, the `relax` condition will never be satisfied. That is a problem in the setup.