Steady State and Residuals PRoblems

Hi Dynare Community,
I set up an Open Econ model as in Gali-Monacelli (2005). I solved for the SS by hand and then set the initial values to the SS values, but Dynare tells me it can’t find the SS. 3 equations have residuals different than 0 and I cannot find out why. I have tried many different things and suggestions but still no luck.
Ultimately I wanna get a Ramsey approximation to both policy rules (monetary and fiscal) but I wanna make sure everything is fine before I go any further. Any help would be appreciate it.

There must still be something wrong with your model. Either your steady state computations or the model equations are wrong. You need to find out why. Use a steady_state_model-block instead of the initval block if you have an analytical steady state.
With the unstable version, I can make Dynare find a steady state, but there is also a singularity warning:

[quote]MODEL_DIAGNOSTICS: The Jacobian of the static model is singular
MODEL_DIAGNOSTICS: there is 2 colinear relationships between the variables and the equations
Relation 1
Colinear variables:
Relation 2
Colinear variables:
Relation 1
Colinear equations
1 14 17 18 19 20 22 31 32 33 35

Relation 2
Colinear equations
14 18 19 20 22 31 32 33[/quote]

If nothing else works, start with a simpler version of the model (e.g. drop nominal rigidities) and then make the model work and slowly rebuild the more complicated features.

Thank you for your reply. I have tried everything you suggested.
1- I used the F command to verify my SS calculations and it looks fine.
2- I log linearized the model and was able to get the IRFs and everything works fine.
3- But the non linear model won’t run. ERROR message: Steady File fails to compute SS.
4- Is there some obvious mistake I might be making and be aware of?
5- And when I open the oo_steady_state, there are some values there. What does that mean?
6- And I used the unstable version too…still nothing.

Any pointer would be welcome.


  1. What do you mean?
  2. That tells you nothing, because linearization does usually not check the steady state for consistency. You can linearize around any point.
  3. As I said: at least one of two things is wrong: your model equations or the steady state computation.

1- sorry, I meant, The F9 command in matlab…
2- True…
3- I’ll keep checking my work I guess.

Thanks for your help.

Quick Question: How do I enter a log utility (sigma=1)??
I got the model to work and when I run the Ramsey it returns an error and I read on here that it has to do with log utility.


You need to enter it explicitly as a log, as Dynare cannot take the limit of the CES function for you. See the agtrend.mod in the Dynare examples folder on how to use the macro language to create a case distinction in your mod-file.

Hello Jpfeifer,
Another question: Is there a way to get the discretionary policy with a non linear model? I need to compare the IRF under commitment, discretion and Exchange rate peg.
Thank you (making progress each time).

As far as I know, this is not yet supported.

Could you please help with this. I derived the FOC of the Ramsey problem under discretion, then wrote the mod file and a steady state file with fsolve to get SS values of the lagrangians, but I get the error term CAT arguments dimensions are not consistent. Thanks a lot for all your help.

In your DSS-file when you try to concatenate everything into F, you must not leave spaces between elements of the expressions. Matlab interprets the sixth line

not as one expression, but as three expression concatenated horizontally, i.e. it takes this line to be a 1 by 3 array.