The Jacobian of the dynamic model contains Inf

Stochastic simulations
1

Dear all,

I tried to write the Gali & Monacelli (2005) small open economy model in levels. The attached the code. However, I encountered the error “The Jacobian of the dynamic model contains Inf. For more information, use options_.debug.” Could anyone help me check where the problem is?

Any help is highly appreciated. Thanks in advance.soe.mod (3.0 KB)

2

model_diagnostics says

MODEL_DIAGNOSTICS: The Jacobian of the static model contains Inf or NaN. The problem arises from:

Derivative of Equation 4 with respect to Variable s (initial value of s: 1)
Derivative of Equation 9 with respect to Variable s (initial value of s: 1)
Derivative of Equation 10 with respect to Variable s (initial value of s: 1)

Looking at the equation, you have (s^(1-eta))^(1/(1-eta)) which is a limit the computer cannot compute. See your old post at Error message: The Jacobian contains Inf or NaN

3

Dear Jpfeifer,

Thanks for your reply. I have modified the calibrated values. The error message “The Jacobian of the static model contains Inf or NaN.” has gone, however, I got the error “The generalized Schur (QZ) decomposition failed”. Could you please help me check where the problem comes from?

Thank you very much. Here attached the code.soe2.mod (2.6 KB)

4

Now you have a collinearity problem that was hidden before. Run model_diagnostics to see the issue.