Hi,

I have tried to build moodel based on a few equations from another model in which I have added

some others. When I try to run the model I get some error messages form Dynare, and

it seems like that the problem is that there is some kind of problem with a colinear variable - in this

case “e” which is the nominel exchange rate.

When running the model I get the following message:

dynare NK_GM05_HJ.mod

Configuring Dynare …

[mex] Generalized QZ.

[mex] Sylvester equation solution.

[mex] Kronecker products.

[mex] Sparse kronecker products.

[mex] Local state space iteration (second order).

[mex] Bytecode evaluation.

[mex] k-order perturbation solver.

[mex] k-order solution simulation.

[mex] Quasi Monte-Carlo sequence (Sobol).

[mex] Markov Switching SBVAR.

Using 64-bit preprocessor

Starting Dynare (version 4.5.4).

Starting preprocessing of the model file …

Found 17 equation(s).

Evaluating expressions…done

Computing static model derivatives:

- order 1

Computing dynamic model derivatives: - order 1
- order 2

Processing outputs …

done

Preprocessing completed.

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:

e

Colinear equations

10 11 12 15

MODEL_DIAGNOSTICS: The presence of a singularity problem typically indicates that there is one

MODEL_DIAGNOSTICS: redundant equation entered in the model block, while another non-redundant equation

MODEL_DIAGNOSTICS: is missing. The problem often derives from Walras Law.

Error using print_info (line 54)

One of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is smaller than 1e-06!

If you believe that the model has a unique solution you can try to reduce the value of qz_zero_threshold.

Error in stoch_simul (line 100)

print_info(info, options_.noprint, options_);

Error in NK_GM05_HJ (line 261)

info = stoch_simul(var_list_);

Error in dynare (line 223)

evalin(‘base’,fname) ;

I have tried a lot of things in order to deal with the problem without any success yet. I thought that someone in this forum might be able to spot what the problem is and how I can deal with it.

I have attached the modfile: NK_GM05_HJ.mod (5.6 KB)

I hope that you are able to help me.

Thanks!