I’ve been trying to use dynare to solve the attached symmetric 2-country model with various frictions. The initial values should be right - I used the steady-state values which should be correct (residuals are minimal), but I still keep getting the following error message:
“??? Error using ==> lnsrch1 at 53
Some element of Newton direction isn’t finite. Jacobian maybe singular or
there is a problem with initial values
Error in ==> solve1 at 126
Error in ==> dynare_solve at 110
Error in ==> steady_ at 69
[oo_.steady_state,check] = dynare_solve([M_.fname 'static’],…
Error in ==> steady at 52
I would greatly appreciate, if someone could point out what might be wrong and what the error message mean.
Thank you very much in advance!
openfin.mod (21.8 KB)