# The equation,Gross inﬂation rate ,should be put in the model?

I already put these four equations in my model,
(P_t^0)/P_t =1/μ S_1t/S_2t
S_1t=〖C_t^(-σ) Y_t MC〗t/P_t+βθE_t π(t+1)^ε S_(1t+1)
S_2t=C_t^(-σ) Y_t+βθE_t π_(t+1)^(ε-1) S_(2t+1)
θπ_t^(ε-1)+(1-θ) ((P_t^0)/P_t )^(1-ε)=1

Should I put Gross inﬂation rate equation in the model as well?
π_t=P_t / P_t -1

From what I can see, yes. Because otherwise the model does not know how to link inflation and the price level already defined and you should be short one equation.

I got it! Thanks a lot!

A new problem as follows:

Starting Dynare (version 5.3).
Calling Dynare with arguments: none
Starting preprocessing of the model file …
Found 38 equation(s).
Evaluating expressions…done
Computing static model derivatives (order 1).
Computing dynamic model derivatives (order 2).
Processing outputs …
done
Preprocessing completed.

Randomize initial guess…

Residuals of the static equations:

Equation number 1 : NaN : 1
Equation number 2 : NaN : 2
Equation number 3 : NaN : 3
Equation number 4 : NaN : 4
Equation number 5 : NaN : 5
Equation number 6 : NaN : 6
Equation number 7 : NaN : 7
Equation number 8 : NaN : 8
Equation number 9 : NaN : 9
Equation number 10 : NaN : 10
Equation number 11 : NaN : 11
Equation number 12 : NaN : 12
Equation number 13 : NaN : 13
Equation number 14 : NaN : 14
Equation number 15 : NaN : 15
Equation number 16 : NaN : 16
Equation number 17 : NaN : 17
Equation number 18 : NaN : 18
Equation number 19 : NaN : 19
Equation number 20 : NaN : 20
Equation number 21 : NaN : 21
Equation number 22 : NaN : 22
Equation number 23 : NaN : 23
Equation number 24 : NaN : 24
Equation number 25 : NaN : 25
Equation number 26 : NaN : 26
Equation number 27 : NaN : 27
Equation number 28 : NaN : 28
Equation number 29 : NaN : 29
Equation number 30 : NaN : 30
Equation number 31 : NaN : 31
Equation number 32 : NaN : 32
Equation number 33 : NaN : r
Equation number 34 : NaN : rstar
Equation number 35 : NaN : 35
Equation number 36 : NaN : 36
Equation number 37 : NaN : a
Equation number 38 : NaN : astar

The steady state has NaNs or Inf.

print_info(info,options_.noprint, options_);

evalin(‘base’,[fname ‘.driver’]);

model_diagnostics(M_,options_,oo_)
Randomize initial guess…
Randomize initial guess…

STEADY: The Jacobian at the initial values contains Inf or NaN. The problem arises from:

Derivative of Equation 30 with respect to Variable c (initial value of c: NaN)
Derivative of Equation 30 with respect to Variable v (initial value of v: NaN)

STEADY: The problem most often occurs, because a variable with
STEADY: exponent smaller than 1 has been initialized to 0. Taking the derivative
STEADY: and evaluating it at the steady state then results in a division by 0.
STEADY: If you are using model-local variables (# operator), check their values as well.

STEADY: numerical initial values or parameters incompatible with the following equations
30

i) if all parameters occurring in these equations are defined
ii) that no division by an endogenous variable initialized to 0 occurs
MODEL_DIAGNOSTICS: The steady state cannot be computed

I look forward to your heip.
experiment.mod (12.3 KB)

This is my computing process as for steady state.
experiment.mod (12.3 KB)

I am getting error that the following objects were not previously defined:

``````set_param_value('phiq', phiq);
set_param_value('phiLAMBDA', phiLAMBDA);
``````

Initially,I used RBC ,and the model does work well(see “invest1”).Afterwords,I use NK,just adding price,pricing equations(4),general price level and monetary policy equation.However the last model(NK) does not work(see “experiment”).