I am working with a two-good open-economy model, with tradable and non-tradable sectors. I have perfect labour and capital mobility across sectors, which translates in equality of the rates of return.
Dynare finds the steady state without any problem, and Blanchard-Kahn are satisfied.
The models works fine when I implement stochastic simulations, of both order 1 and 2. When instead I try deterministic simulations, Dynare returns me an error message “Matrix is singular to working precisions”.
Did any of you experienced such an odd thing?