Hello everyone,

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

[x,f,fvec,check]=lnsrch1(xold,fold,g,p,stpmax,func,j1,j2,varargin{:});

Error in ==> dynare_solve at 110

[x,info]=solve1(func,x,j1(r(i):r(i+1)-1),j2(r(i):r(i+1)-1),jacobian_flag,varargin{:});

Error in ==> steady_ at 69

[oo_.steady_state,check] = dynare_solve([M_.fname '*static’],…
Error in ==> steady at 52
steady*;…”

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)