You have some linear equations with a constant term, namely the observation equations. Given that you have 70 equations or so, there is some numerical imprecision. You should provide initial values for the non-zero variables, i.e.
initval;
// Domestic inflation
pi_obs = 100*(pi - 1);
// CPI inflation
pi_c_obs = 100*(pi - 1);
// GDP
dy_obs = 100*ln(mu_z);
// Consumption
dc_obs = 100*ln(mu_z);
// Investment
di_obs = 100*ln(mu_z);
// Imports
dm_obs = 100*ln(mu_z);
// Exports
dx_obs = 100*ln(mu_z);
// Government spending
dg_obs = 100*ln(mu_z);
// CPI based real exchange rate
reer_obs = x;
// Employment
e_obs = E;
// Real wage
dw_obs = 100*ln(mu_z);
// Domestic interest rate
r_obs = 400*(((pi*mu_z-tau_k*beta)/((1-tau_k)*beta))-1)*((pi*mu_z-tau_k*beta)/((1-tau_k)*beta));
// Foreign output
dyfor_obs = 100*ln(mu_z);
// Foreign inflation
pifor_obs = 100*(pi - 1);
// Foreign interest rate
rfor_obs = 400*((pi*mu_z-tau_k*beta)/((1-tau_k)*beta) - 1)*(pi*mu_z-tau_k*beta)/((1-tau_k)*beta);
end;