Hello I constructed a simple social planner model with public capital, following Baxter and King (1993). For simplicity, labor is endowed (fixed). The production function is Cobb-Douglas, but includes both private and public capitals. The utility is set as log of consumption.
When I constructed a model in the first place, technology was a standard form, like A*k^(theta1)*kg^(theta2), but this did not work well. I moved technology shocks to private and public investments as separate two shocks. Still not working well. The steady state was calculated well, but the simulation was not with the following error message… Can you please have a look? Many thanks in advance!
Error using print_info The generalized Schur (QZ) decomposition failed. For more information, see the documentation for Lapack function dgges: info=30, n=6. You can also run model_diagnostics to get more information on what may cause this problem. Error in stoch_simul (line 120) print_info(info, options_.noprint, options_); Error in Planner0826.driver (line 200) [info, oo_, options_, M_] = stoch_simul(M_, options_, oo_, var_list_); Error in dynare (line 281) evalin('base',[fname '.driver']);
After punching in model_diagnostics:
MODEL_DIAGNOSTICS: The Jacobian of the static model is singular MODEL_DIAGNOSTICS: there is 2 colinear relationships between the variables and the equations Relation 1 Colinear variables: y c k kg i ig Relation 2 Colinear variables: y c k kg i ig Relation 1 Colinear equations 2 Relation 2 Colinear equations 1 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.
Planner0826.mod (2.0 KB)