SOE with Tradables and Non Tradabless

Stochastic simulations
1

Dear all,
I want to model a SOE with Tradables and Non-Tradable goods.
I have started from [this code]
(Dropbox - SOE2Gzip - Simplify your life), but I get 1 colinear relation.
I am not sure what could be the missing equation, so I was wondering if anybody could help me.
Thank you very much for your help and advice.
nk_open.mod (3.8 KB)
console_nkopen.m (1.6 KB)

2

It’s hard to tell without going through all of the derivations. But

1=(pn^(1-gamma))^(1-alpha)*s^(alpha);
pn^(1-gamma)=s^(-alpha/(1-alpha));

are identical. So there is clearly an equation missing.

3

Hello,
thanks!
I have tried introducing the UIP, as the missing equation, but I still get a collinearity problem.
Do you have any tip on what might be the probem?
Thank you very much in advance.
nk_open_2.mod (3.9 KB)