Hope you re doing well. I am trying to do a perfect foresight simulation of an OLG model but I cannot find the source of the problem. I suspect that it might be a timing issue (for example the timing of the bond interest rate) but I am not sure. Model diagnostics do not report any problem with the mod file.
Just to give an idea, when I want to implement a policy change e.g. reduction in the labour tax rate from 0.13 to 0.12 simulation fails (matrix is singular or some complex numbers are produced)
Dear Johannes
Thank you for your reply. I worked a bit on the timing of the model and I managed to solve some of its issues. I can find a perfect foresight solution and convergence and my IRFs make sense. However I still get these warnings about Jacobian’s matrix singularity even thought there are no other obvious problems. So my question is: should i trust the results coming out of this deterministic simulation or not? I attach the mod file if helps.