Question: How does Dynare treat parameter draws which result in the Jacobian of the dynamic model containing Inf? Do these draws get discarded and the likelihood set to a penalty as in the cases listed in the cross-post https://archives.dynare.org/phpBB3/viewtopic.php%3Ff=1&t=5171.html?
Background: I am working on a replication .mod for Schmitt-Grohe and Uribe (2012) which incorporates the JR preference structure used in Jaimovich and Rebelo (2009) to govern the wealth effect of labor supply using a parameter γ∈ (0,1] which is to be estimated. Very low values of this parameter imply the steady state value of the (stationarized) stock of current and past-habit adjusted consumption levels approaches zero, and the inverse of this near-zero steady-state value enters one of the FONCs. As a result of this division by (near) zero, the solver is returning Inf for elements of the Jacobian associated to this FONC.