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 messageā¦ 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)