Dear Dynare team,
I am using Dynare (4.5.7 and also 4.5.3) to compute a model with super high risk aversion. I noticed that if I set the relative risk aversion to be more than 15, then Dynare complains that “generalized Schur (QZ) decomposition failed”.
When I run model_diagnostics(M_,options_,oo_), I got message about The presence of a singularity problem, which comes from the collinearity problem.
These errors only occur if I set risk aversion to be super high, e.g. higher than 15.
I am wondering does it mean that Dynare cannot handle large risk aversion due to the QZ decomposition?
Thank you very much in advance. Looking forward to your helps.