# Steady State Solved, but System has a Unit Root
**URL:** https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203
**Category:** Stochastic simulations
**Created:** [22 January 2026 17:55 UTC](https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203 "2026-01-22T17:55:45Z")
**Posts on this page:** 4
**Page:** 1
### Author:  [@Henry.Austin](https://forum.dynare.org/u/Henry.Austin)
#### Post date: [22 January 2026 17:55 UTC](https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203/1 "2026-01-22T17:55:46Z")
Dear Professor,
May I request identifying which equation has caused a unit root in my model and why. My steady state was calculated numerically using fsolve.
Please find atfached a .mod file:
Kind Regards,
Henry
[UC.mod](https://forum.dynare.org/uploads/short-url/iZR3PQoQqesoOl2N0UC3ogUrBMm.mod) (3.9 KB)
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### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [23 January 2026 12:39 UTC](https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203/2 "2026-01-23T12:39:58Z")
The first immediate issue is:
> MODEL\_DIAGNOSTICS: The following endogenous variables aren’t present at the current period in the model:
> K
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### Author:  [@Henry.Austin](https://forum.dynare.org/u/Henry.Austin)
#### Post date: [23 January 2026 15:59 UTC](https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203/3 "2026-01-23T15:59:48Z")
Dear Professor,
I have since updated my code to amend this.
Do you know which equation is likely causing the unit root error?
[UC.mod](https://forum.dynare.org/uploads/short-url/3z1dUpLO4A6seT9ENMrR4vAl2g7.mod) (3.9 KB)
Kind Regards,
Henry
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### Author:  [@jpfeifer](https://forum.dynare.org/u/jpfeifer)
#### Post date: [24 January 2026 10:19 UTC](https://forum.dynare.org/t/steady-state-solved-but-system-has-a-unit-root/28203/4 "2026-01-24T10:19:17Z")
I don’t know, but my hunch is something along the lines of
> [@Colinearity in a two-households-model due to similar euler equations](https://forum.dynare.org/t/colinearity-in-a-two-households-model-due-to-similar-euler-equations/22750/4):
>
> No, I am saying that there might be something like the permanent income hypothesis at work. Any shock that moves the debt position will move it permanently and there is no tendency to return to the old level. That is a common thing happening under perfect foresight. Things usually change under stochastics. For example, the unit root in small open economy models vanishes when agents take future shocks into account. The same happens in consumption Euler equations due to Jensen’s Inequality.