# Optimal policy with commitment **URL:** \ **Category:** Dynare help (legacy posts)\ **Created:** [24 December 2015 01:41 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193 "2015-12-24T01:41:14Z")\ **Posts on this page:** 5\ **Page:** 1
**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\ **Post date:** [24 December 2015 01:41 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193/1 "2015-12-24T01:41:14Z")
Hi Professor Pfeifer ``` I build a two-country dsge model with simple feedback rules. The steady state values are provided in the steady state model block, and the dynare code can run. After I comment out ``` the feedback rules and turn to ramsey optimal policy, dynare reports the steady state value contains NaN or inf. I have checked the variables and parameters,they are all defined and evaluated, so I don’t know which part of the model get wrong. By the way, does dynare have the debug function ? James [paper.mod](https://forum.dynare.org/uploads/default/original/2X/a/adf422c7f052673086d69e497d75ef7d822b186c.mod) (9.99 KB) [find\_ws.m](https://forum.dynare.org/uploads/default/original/2X/8/83c61153a609db75ee8cccefbadc822c03e329b4.m) (15.2 KB) ---
**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:** [27 December 2015 19:10 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193/2 "2015-12-27T19:10:28Z")
The unstable version says [quote]POLICY AND TRANSITION FUNCTIONS V de Constant 1.005000 1.002494 bg(-1) -1.330337 0.533541 bgs(-1) -0.007358 -0.019916 fr(-1) 5.502187 0.766531 bc(-1) 0.571921 -0.038824 k(-1) -1.370886 0.112155 k\_s(-1) -0.213025 0.019345 PI\_H(-1) 1.345373 -0.611676 PI\_F(-1) 0.515744 -0.373010 MULT\_22(-1) -1.973379 0.300496 MULT\_29(-1) 197.690235 -40.842518 c(-1) 0.890554 -0.348794 c\_s(-1) 0.044540 0.123680 R(-1) 30.165820 -2.047788 R\_s(-1) -0.976821 -0.573657 ph(-1) 0.000508 -2.490408 pfs(-1) -0.196266 -0.847491 m(-1) 0.520963 -0.038554 rer(-1) 0 -1.092264 taul(-1) 2.600815 -0.457738 tauls(-1) 1.035225 -0.232173 eps\_Rs(-1) 0.122245 -0.342608 eps\_H(-1) -6.827140 1.201562 eps\_F(-1) -2.846870 0.638476 MULT\_9(-1) -2429.018649 132.737927 MULT\_10(-1) -2966.117463 201.433460 MULT\_12(-1) 8871.107173 -1834.241503 MULT\_13(-1) 5183.164060 -1073.463212 MULT\_25(-1) -1030.877458 213.096110 eta\_l 1.924603 -0.338726 eta\_ls 0.476204 -0.106800 eta\_Rs -0.244490 0.685216 eta\_H -13.654280 2.403125 eta\_F 5.693740 -1.276953 All endogenous are constant or non stationary, not displaying correlations and auto-correlations STEADY-STATE RESULTS: V 1.005 de 1.00249 c 0.77206 c\_s 0.863804 i 0.523022 i\_s 0.301329 R 1.00701 R\_s 1.00451 b 53.3652 b\_s 0.771631 bg 0.250512 bgs 0.771631 fr 0 bc 53.1147 w 2.15786 w\_s 2.5785 l 0.4 l\_s 0.3 tr -0.0644489 tr\_s 0.155876 q 1 q\_s 1 r 0.022004 r\_s 0.022004 k 26.1511 k\_s 15.0664 PI 1.005 PI\_s 1.0025 PI\_H 1.005 PI\_F 1.0025 y\_H 2.12928 y\_F 0.971377 ph 0.788245 pfs 1.32725 phd 22.8814 phn 28.9549 pfd 13.9169 pfn 10.4724 m 21.3949 m\_s 41.5568 rer 0.917813 mc\_h 0.675616 mc\_f 1.13763 g 0.38331 g\_s 0.124127 y 1.67839 y\_s 1.28926 gdp 1.67839 gdp\_s 1.28926 ca 0 ca\_s 0 tb 0 tb\_s 0 taul 0.37 tauls 0.23 eps\_v 1 eps\_Rs 1 eps\_H 1 eps\_F 1[/quote] ---
**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\ **Post date:** [28 December 2015 13:57 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193/3 "2015-12-28T13:57:07Z")
Hi, professor Pfeifer ``` I have a new question. Before I turn to ramsey optimal policy, I run the code with simple rules, the model diagnostics does not report any colinear relationship. But as I turn to ramsey policy,the dynare reports the following messages: Warning: Matrix is close to singular or badly scaled. Results may be inaccurate. RCOND = 3.060307e-021. So I run the model diagnostics after it, the feedback message said that there are two collinear equtions. It this possible ? Should I worry about this problem ? ``` ---
**Author:** ![jameszhow1985](https://forum.dynare.org/letter_avatar_proxy/v4/letter/j/8baadc/32.png) [@jameszhow1985](https://forum.dynare.org/u/jameszhow1985)\ **Post date:** [30 December 2015 02:54 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193/4 "2015-12-30T02:54:22Z")
[quote=“jameszhow1985”]Hi, professor Pfeifer ``` I have a new question. Before I turn to ramsey optimal policy, I run the code with simple rules, the model diagnostics does not report any colinear relationship. But as I turn to ramsey policy,the dynare reports the following messages: Warning: Matrix is close to singular or badly scaled. Results may be inaccurate. RCOND = 3.060307e-021. So I run the model diagnostics after it, the feedback message said that there are two collinear equtions. It this possible ? Should I worry about this problem ?[/quote] ``` Can someone tell me how to fix the collinearity problem I mentioned above ? Any suggestion is appreciated. ---
**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:** [30 December 2015 10:49 UTC](https://forum.dynare.org/t/optimal-policy-with-commitment/5193/5 "2015-12-30T10:49:22Z")
Try to understand the solution you find. Maybe there is an economic reason why the computed Ramsey policy looks like this.