Steady State operator in a Nonlinear model

[RodrigoTM]

Hi.

I have a nonlinear model with a steadystate file (and a auxiliary function). I ran the model and BK conditions were satisfied but the model diagnostics tells me:

The Jacobian of the static model is singular
there is 6 colinear relationships between the variables and the equations

The IRFs seems to be ok, so I thought it was a problem with steady_state() operator that cannot computed all the steady states endogenously.
When I substituted all the steady_state operators in model for parameters and set the parameters to the values calculated in the first run, the model diagnostics does not find anything wrong (the Jacobian message disappears).

I have read some topics about it but I do not know the best practice here. The only way to avoid the error message for me is to create parameters for all variables (like *_ss) and then set all of them in the steady_state_model block or leave it like the first run and just do not care about the message.
Is there another way?

Thank you all.

[jpfeifer]

Yes, you have the same issue with the Fisher equation as described in

Levels versus Growth Rates

You are confusing something. If collinearity arises after using the steady_state operator, what you have done is exactly to remove the capability of the model to determine the steady state of that variable as a function of the parameters. Take again the example of the Fisher equation and steady state inflation. If you exogenously provide the steady state inflation pibar (which cannot be endogenously determined), you can endogenously compute the steady state nominal interest as the product of re…

Given that you fix the steady state with a steady state file, you can simply ignore the collinearity. It’s not a bug in your model in this case.

[RodrigoTM]

Thanks again, Professor Pfeifer.