Hi people,

After searching the internet and the forum for a couple of days I finally turn to your expert knowledge. Im stuck at the modelling process of my master thesis so any help will be greatly appreciated and good karma will come your way

Its a trivial question, I know, but I get the error message that " numerical initial values or parameters incompatible with the following equations" but are unable to see the solution (mainly because of limited Dynare knowledge).

I’ve tried to solve my model by:

- Defining steady state parameters, not from initial values, but from non-linear equations
- Writing the dynamic equations governing the endogenous variables on non-linear form
- Dynare should then log-linearize the equations and find a steady state with all values equal to zero

When running the program I get the common error message that:

**Numerical initial values or parameters incompatible with the following equations**

And that I should try to solve the problem by - **checking if if all parameters occurring in these equations are defined and/or that no division by an endogenous variable initialized to 0 occurs**.

I can see from my output which equations are affected (since i get NaN), e.g.:

*Residuals of the static equations:

Equation number 1 : 0

Equation number 2 : 0

Equation number 3 : NaN

Equation number 4 : 0

Equation number 5 : 0

Equation number 6 : -1.014

Equation number 7 : 0

Equation number 8 : 0

Equation number 9 : 0

Equation number 10 : 0

Equation number 11 : -1.014

Equation number 12 : 0

Equation number 13 : -0.01

Equation number 14 : NaN

Equation number 15 : NaN

Equation number 16 : NaN

Equation number 17 : NaN

Equation number 18 : NaN

Equation number 19 : NaN

Equation number 20 : NaN

Equation number 21 : 0

Equation number 22 : NaN

Equation number 23 : 0

Equation number 24 : NaN

Equation number 25 : NaN

Equation number 26 : 0

Equation number 27 : 0

Equation number 28 : 0

Equation number 29 : 0

Equation number 30 : 0

Equation number 31 : 0

Equation number 32 : 0

Equation number 33 : 0*

I’ve tried to eliminate the “NaN” by rewriting the effected equations such that there is no division by an endogenous variable (instead the variables are multiplied onto the expression). In most cases this makes the “NaN” disappear and a zero appear in its place.

However, I’m unsure how to interpret this solution:

- does it mean that instead of dividing my zero (which Dynare cant handle) I’m multiplying with zero and therefore the endogenous variable affected becomes zero?
- Or does a zero residual of the static equation mean that the deviation from steady state of the variable in question is zero, i.e. the equation is “correct”?

**I have attached my code, I hope that someone can guide me as to how to proceed towards a functioning code - should I proceed with rewriting the equations or is this not a solution?**

Thanks guys!

Dynrev33.mod (11.7 KB)