QZ decomposition failed but no problem as per model diagnostics

Stochastic simulations
1

Dear all,

I am a running a 2 sector RBC model with composite consumption function. While the steady states are solved, I face “QZ decomposition failed” error. Mode_diagnostics indicates that there is no obvious problem in the model. How do I resolve it? Does this also mean that my model is not stable?

PFA the mod file for reference.
Example.mod (2.8 KB)

Thanks and regards,
Pratik Thakkar

2

It’s very unusual to have variables hardcoded to be 0.

3

Dear Prof. jpfeifer,

The model intends to keep abatement cost and efforts to be zero in this specific case, that is why it is considered zero. Does that affect the working of the model?

Regards,
Pratik

4

It’s hard to tell. I would first recommend to check the timing again. For example,

dK = dI(-1) + (1-deltad)*dK(-1);

looks strange.