Problem in evaluate_steady_state

Steady state
1

Dear developers,

I just wanted to report an issue I encountered while trying simulate a linear model using Dynare. I am solving a model where: (1) constants are introduced in measurement equations (so that the steady state of related variables is not zero) and (2) One of the equations defines a variable as a random walk.

Using the above model the following issue arises: when getting steady-state values in evaluate_steady_state.m, dynare has to inverse the matrix ‘jacob’ (the coefficients of model variables in the model equations), which, in the presence of the RW variable, is singular. Therefore the ys vector is filled with NaNs, which triggers an error message.

I was able to deal with the issue in my specific case but just wanted to let you know in the case where you want to fix this in new dynare releases.

Hope this can help,

Boris

2

That is expected behavior. With a unit root, the Jacobian is singular and cannot be inverted. Essentially, there are infinitely many steady states and the Jacobian does not provide any information on the search direction to select one. With unit roots, you as the user need to select one of the infinitely many steady states.