Hi, in my model PPI represents inflation plus one, in time t-1 there is no price or price=0, so I cannot define inflation for time t (since: PPI=P(t+1)/P(t)) and it starts at time t+1, now my question is if I should set PPI as predetermined variable? And if not, what should I do about this error? …

TSS=0 will imply that T drops from the model.

You have no price variable in your model. Price (P) should be in the model, and then define PPI = P - P(-1); Also, PPI=P(t+1)/P(t) seems wrong…perhaps you mean PPI=P/P(t-1)

When I add price I face the following error: model_diagnostics(M_,options_,oo_) 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: P Colinear equations 1 2 …

Thanks a lot for the information. Now it runs but one of my variables (sp) is nan in final result. aliye.mod (2.4 KB)

Some of the moments are NaN. But that’s due to SP being a constant due to SP=0;

I tried to change model to solve sp=0 problem, Now there is this error, how can I solve this: model_diagnostics(M_,options_,oo_) MODEL_DIAGNOSTICS: The Jacobian of the static model is singular MODEL_DIAGNOSTICS: there is 1 colinear relationships between the variables and the equations Coline…

But how can you find T if TSS=0? TSS=0; predetermined_variables M, K; model(linear); (MSS/PSS)*PPISS*(M(+1)+PPI(+1)-P(+1))-(MSS/PSS)*(M-P)=(TSS/PSS)*(T-P); It works when TSS = 2... Btw…steady-state values should be derived from the model as a function of the parameters in the model, yeah?. Thus, …

Yes, I changed the model and not the parameters, but I still think tss=0 is true, it does not run with tss=2 or other numbers, I get the following error, does it run for you? Index exceeds matrix dimensions. Error in resid (line 101) if abs(z(i)) < options_.solve_tolf/100 Error in aliye.driver…

Not sure why you have a problem running it…it works for me for TSS=2 [Screenshot from 2021-12-16 13-00-13] All I was saying is that if TSS = 0, then (TSS/PSS)*(T-P) = 0 in your model. It is the same as replacing (TSS/PSS)*(T-P) with 0 in your model…and you can’t find T in that model. I mean if T…

Dynare Forum

Predetermined variable t+1

Stochastic simulations

jpfeifer 15 December 2021 08:31 4

See

Unit root problem Stochastic simulations

You need to distinguish between a unit root and a singularity problem. Whenever you have a unit root you will get that message about collinearity in model_diagnostics. But that does not always indicate that there is something wrong. If the unit root is a feature of your model (like e.g. in the basic New Keynesian model where the price level has a unit root) then everything is fine. You only have a problem if the unit root should not be there or if the Blanchard-Kahn conditions are not satisfied…

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