Simulation error

Hi,

I am a new user and running a simple model. I am getting the following partial simulation output. Kindly advise.

Configuring Dynare …
[mex] Generalized QZ.
[mex] Sylvester equation solution.
[mex] Kronecker products.
[mex] Sparse kronecker products.

Starting Dynare …
Starting preprocessing of the model file …
4 equation(s) found
Processing derivation …
Processing Order 1… done
Processing Order 2… done
Processing outputs …
Preprocessing completed.
Starting Matlab computing …

STEADY-STATE RESULTS:

q -0.0235798
y -0.0754553
r -0.264094
m 0

EIGENVALUES:
Modulus Real Imaginary

      0.7993           0.7993                0
         0.9              0.9                0
      0.9799           0.9799                0

There are 0 eigenvalue(s) larger than 1 in modulus
for 0 forward-looking variable(s)

The rank condition is verified.

MODEL SUMMARY

Number of variables: 4
Number of stochastic shocks: 3
Number of state variables: 3
Number of jumpers: 0
Number of static variables: 1

MATRIX OF COVARIANCE OF EXOGENOUS SHOCKS

Variables p g e
p 0.000000 0.000000 0.000000
g 0.000000 0.000000 0.000000
e 0.000000 0.000000 0.000020

POLICY AND TRANSITION FUNCTIONS
r q y m
??? Reference to non-existent field ‘ghs2’.

Error in ==> disp_dr at 60
x = x + dr.ghs2(ivar(i))/2;

Error in ==> stoch_simul at 65
disp_dr(oo_.dr,options_.order,var_list);

Error in ==> blanchard at 123
info = stoch_simul(var_list_);

Error in ==> dynare at 102
evalin(‘base’,fname) ;

Here is the model file:
// Blanchard’s Partly Rational Model

var q y r m;
varexo p g e;
parameters a0 a1 c h s a b rho;
a0=0.01;
a1=0.05;
c=3.5;
h=5;
s=0.03;
a=0.8;
b=0.25;
rho=0.9;

// Model Equations - Endogenous Variables

model;
y=y(-1)+s*((aq)-(by)+g);
q=q(-1)+(rq)-a0-(a1y);
r=(cy)-h(m-p);
m=rho*m(-1)+e;
end;

// Steady state or initial value/s

initval;

q=1;
y=0;
r=0.05;
e=0;
m=0;
end;

steady;

check;

// Define shocks

shocks;
var e = 0.00002;
end;

//Computation

stoch_simul(periods=2100);

Kindly advise.

Regards,

Adeem

Hi Adeem,
Dynare does not support second order approximation for purely backward looking models (the version 4.1 gives you exactly this error message). Put

stoch_simul(order=1,periods=2100);

instead of

stoch_simul(periods=2100);

and it works on my machine.

Best regards

Johannes

Thankyou indeed. It worked.

Adeem