One of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is smaller than 0.0000!)s

Stochastic simulations
1

example.mod (2.4 KB)

Hello,
After obtaining the first order conditons for the problems of households and firms, and the steady state (with hand and paper), I try to compute my model with parameter calibration based on Greenwood et al. (1997) : https://faculty.wcas.northwestern.edu/~lchrist/papers/aer_GHK.pdf
The issue is that I got 2 main problems :

  1. One of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is smaller than 0.0000!), with the following : If you believe that the model has a unique solution you can try to reduce the value of qz_zero_threshold.
  • How can I reduce the value of qz_zero_threshold manually ?
  1. My steady state results are negative. It should not be for some variables like consumption, factor production, output, etc.
    (Since all the variables are implicitely defined in logs, I take the exp, the SS results are reported in logs, and the log of values less than 1 is negative, maybe that is the reason ?)

PS: the command model_diagnostics(M_,options_,oo_) gives : No obvious problems with this mod-file were detected.

I don’t know if there is other problems. Your help would be much appreciated !

2
  1. I get
MODEL_DIAGNOSTICS:  The Jacobian of the static model is singular
MODEL_DIAGNOSTICS:  there is 1 colinear relationships between the variables and the equations
Colinear variables:
y
z
k
c
w
I
Colinear equations
     3     5     6     7     8     9

MODEL_DIAGNOSTICS:  The presence of a singularity problem typically indicates that there is one
MODEL_DIAGNOSTICS:  redundant equation entered in the model block, while another non-redundant equation
MODEL_DIAGNOSTICS:  is missing. The problem often derives from Walras Law.

There seems to be a fundamental singularity.
2. Yes, the negative values come from taking the log, which should be fine.

1 Like
3

Thank you professor for your response.

4

Then how to solve this problem.

5

You need to understand where the singularity comes from, i.e. which equation you forget and why one the included ones is redundant.