Singularity under commitment (not discetion) in a cost channel model

Optimal Policy
1

Hi dear all,
I run my dsge model with a cost channel in dynare based on matlab codes for optimal policy under discretion and commitment (Soderling, 1999). I get that under commitment, there is singularity, while under discretion this is not the case.
I was wondering how is that possible since it is the same model.
What am I missing?

Thanks a lot.
X.

2

You need to provide more details. What is the exact error message?

3

The exact error message is:
Error using ComItAlg (line 87)
Zkt or Stt is singular

Error in NKM_optimalpolicy_2 (line 122)
[ M_Commit,C_Commit ] = ComItAlg( A,B,Q,R,U,beta,n1,n2,1.0 );

Do you want to attach the codes?

Thanks in advance :slight_smile:

4

But the error is not in a Dynare function. I am not sure we can help.

5

Thank you prof.Pfeifer.
Yes, the error is not in a Dynare function.
I just wondering why might this happens (I search for a theoretical reason).
Sorry if my post is irrelevant.

X.

6

As we don’t know how you exactly solve the model or what the error message refers to, it is impossible to tell. Is there a reason you don’t use Dynare?

7

I just wanted to test these codes because the article that I rely on…work with these codes.

8

I am afraid you are on your own then.