Dear Professor,

The core of my problem now is that the same .mod file which sent the error message about some equations not having zero residuals under ramsey command runs perfectly when I remove the instrument ( tax rate on consumption and capital income) from var list and introcue them as parameter in the model and fix the corresponding equations accordingly. But with ramsey optimal policy where the two instruments are taken to var list it could not run> After model_diagnostics command, I got the following:

Warning: Some of the parameters have no value (optimal_policy_discount_factor) when using model_diagnostics. If these

parameters are not initialized in a steadystate file or a steady_state_model-block, Dynare may not be able to solve the

model…

Warning: Either you have not correctly initialized planner_discount or you are calling a command like steady or stoch_simul

that is not allowed in the context of ramsey_policy

MODEL_DIAGNOSTICS: The Jacobian of the static model contains Inf or NaN. The problem arises from:

Derivative of Auxiliary Equation 4 with respect to Variable Y (initial value of Y: 2.03204)

Derivative of Auxiliary Equation 2 with respect to Variable C (initial value of C: 0.558887)

Derivative of Auxiliary Equation 10 with respect to Variable C (initial value of C: 0.558887)

Derivative of Auxiliary Equation 12 with respect to Variable C (initial value of C: 0.558887)

Derivative of Auxiliary Equation 13 with respect to Variable C (initial value of C: 0.558887)

Derivative of Auxiliary Equation 4 with respect to Variable K (initial value of K: 4.63789)

Derivative of Auxiliary Equation 4 with respect to Variable L (initial value of L: 1.32834)

Derivative of Auxiliary Equation 4 with respect to Variable Z (initial value of Z: 1)

Derivative of Auxiliary Equation 8 with respect to Variable Z (initial value of Z: 1)

Derivative of Auxiliary Equation 2 with respect to Variable R (initial value of R: 0.148967)

Derivative of Auxiliary Equation 12 with respect to Variable R (initial value of R: 0.148967)

Derivative of Auxiliary Equation 13 with respect to Variable R (initial value of R: 0.148967)

Derivative of Auxiliary Equation 2 with respect to Variable tau_K (initial value of tau_K: 0)

Derivative of Auxiliary Equation 10 with respect to Variable tau_K (initial value of tau_K: 0)

Derivative of Auxiliary Equation 13 with respect to Variable tau_K (initial value of tau_K: 0)

Derivative of Auxiliary Equation 2 with respect to Variable tau_C (initial value of tau_C: 0.18)

Derivative of Auxiliary Equation 10 with respect to Variable tau_C (initial value of tau_C: 0.18)

Derivative of Auxiliary Equation 12 with respect to Variable tau_C (initial value of tau_C: 0.18)

Derivative of Auxiliary Equation 13 with respect to Variable tau_C (initial value of tau_C: 0.18)

Derivative of Auxiliary Equation 2 with respect to Lagrange multiplier of equation 2 (initial value: 0)

Derivative of Auxiliary Equation 10 with respect to Lagrange multiplier of equation 2 (initial value: 0)

Derivative of Auxiliary Equation 12 with respect to Lagrange multiplier of equation 2 (initial value: 0)

Derivative of Auxiliary Equation 13 with respect to Lagrange multiplier of equation 2 (initial value: 0)

Derivative of Auxiliary Equation 4 with respect to Lagrange multiplier of equation 3 (initial value: 0)

Derivative of Auxiliary Equation 8 with respect to Lagrange multiplier of equation 4 (initial value: 0)

Derivative of Auxiliary Equation 4 with respect to Lagrange multiplier of equation 5 (initial value: 0)

Derivative of Auxiliary Equation 6 with respect to Lagrange multiplier of equation 6 (initial value: 0)

Derivative of Auxiliary Equation 3 with respect to Lagrange multiplier of equation 7 (initial value: 0)

Derivative of Auxiliary Equation 4 with respect to Lagrange multiplier of equation 8 (initial value: 0)

MODEL_DIAGNOSTICS: The problem most often occurs, because a variable with

MODEL_DIAGNOSTICS: exponent smaller than 1 has been initialized to 0. Taking the derivative

MODEL_DIAGNOSTICS: and evaluating it at the steady state then results in a division by 0.

MODEL_DIAGNOSTICS: If you are using model-local variables (# operator), check their values as well.

MODEL_DIAGNOSTICS: The Jacobian of the dynamic model contains Inf or NaN. The problem arises from:

Index in position 2 is invalid. Array indices must be positive integers or logical values.

Error in display_problematic_vars_Jacobian (line 67)

if M_.aux_vars(1,problemcol(ii)-M_.orig_endo_nbr).type==6 %Ramsey Lagrange Multiplier

Error in model_diagnostics (line 235)

display_problematic_vars_Jacobian(infrow,infcol,M,dr.ys,‘dynamic’,'MODEL_DIAGNOSTICS: ')

Error in optimal_fiscal_2.driver (line 338)

model_diagnostics(M_,options_,oo_);

Error in dynare (line 293)

evalin(‘base’,[fname ‘.driver’]) ;