As I posted days before, I am developing a DSGE model based on Gerali(2010). It has a real sector similar to the one presented by Brzoza-Brzezina and Krzysztof (2011). The model’s novelty is that there are households who take debt in foreign currency. I tried to run the model with calibrated parameters but I didn’t succeed. Dynare says that there is a rank condition failure. But, nevertheless I use the Model Diagnostic command, Dynare does not tell me what kind of error I have.
Can you please help me or give some advice of how to fix this problem or what could be wrong?
I will appreciate all your comments.
Please find attached the mod.file
draft7d.mod (24.9 KB)
As always in theses cases, simplify your model to a point where it works and then start adding features back again to see where the problem comes from. Debugging models of this size is close to impossible.
Thank you Professor Feifer.
I tried eliminating the new type of households and still it does not work.
Could it be caused by a wrong calibration?
Thanks again for your response.
Ideally, you start with a working version of Gerali et al and then continue from there. It can be a matter of parameterization, but that is unlikely (but easy to test)
Thanks a lot for your suggestion, Professor Pfeifer.
Could you please suggest how can I test for whether parameterization is the problem in case of rank failure?
Thank you in advance.
Try different parameter values and see whether that changes anything.