# Unit roots in DYNARE for OCTAVE

Hi,

I’ve run DYNARE on a simple open economy model with unit root due to incomplete markets.
It’s a portfolio problem and I need to check the solution allowing for the unit root (so eliminating it in the usual way is not good for me).

I get the error message

error: lyapunov_sym: you need a Matlab version > 6.5 to handle models with unit roots
error: evaluating if command near line 39, column 3
error: called from `lyapunov_symm' in file`/usr/lib/dynare/matlab/lyapunov_symm.m’
error: evaluating if command near line 69, column 3
error: called from `th_autocovariances' in file`/usr/lib/dynare/matlab/th_autocovariances.m’
error: called from `disp_th_moments' in file`/usr/lib/dynare/matlab/disp_th_moments.m’
error: evaluating if command near line 52, column 3
error: called from `stoch_simul' in file`/usr/lib/dynare/matlab/stoch_simul.m’
error: evaluating assignment expression near line 299, column 6
error: evaluating for command near line 293, column 2
error: near line 301 of file `/home/lombardo/gianni/models/current_papers/portfolio_new/ds_example/ds_example_3c.m' error: called from`dynare’ in file `/usr/lib/dynare/matlab/dynare.m’

Hi Gianni,

this is something that we haven’t dealt with in Octave yet.

In order to separate the stationary variables and report their variance, we use in Matlab an ordered Schur decomposition that places the unit roots in the upper left part of the triangular matrix. This isn’t available in Octave and we will need to add the corresponding DLL to Dynare.

Best

Michel