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

example.mod (2.4 KB)

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) :
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 !

  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:
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

Thank you professor for your response.

Then how to solve this problem.

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