Hi all,

My .mod file ends with

The code goes through well except two earnings. The printout screen looks like:

MODEL SUMMARY

*nothing special here*

MATRIX OF COVARIANCE OF EXOGENOUS SHOCKS

*nothing special here*

POLICY AND TRANSITION FUNCTIONS

*nothing special here*

Warning: Matrix is close to singular or badly scaled. Results may be

inaccurate. RCOND = 1.451571e-18.

In th_autocovariances at 149

In disp_th_moments at 37

In stoch_simul at 164

In modfilename at 687

In dynare at 180

Warning: Aggregate variance and sum of variances by shocks differ by more than

0.01 %

In th_autocovariances at 198

In disp_th_moments at 37

In stoch_simul at 164

In modfilename at 687

In dynare at 180

APROXIMATED THEORETICAL MOMENTS

*some "NAN"s*

APPROXIMATED VARIANCE DECOMPOSITION (in percent)

*nothing special here*

APPROXIMATED MATRIX OF CORRELATIONS

*nothing special here*

APPROXIMATED COEFFICIENTS OF AUTOCORRELATION

*nothing special here*

In the model, one variable follows random walk, and some variables are functions of this random walk.

- I guess that APROXIMATED THEORETICAL MOMENTS have NAN because of the random walk.
- I’m not sure how the first warning affects the model’s performance. Is it a red flag? Is it due to random walk variable?
- As for the second warning, I find the post Ask for help urgently very useful. It says that this warning may come from the large size of my model, and it’s not avoidable. I wonder whether the random walk behavior of endogenous variable will contribute to this warning.

Thanks very much for your help!