Verify that the equations tagged by [static] and [dynamic] are consistent

Occbin
23

Many thanks Prof.

24

Dear Prof.

In attempt to solve the Matrix is close to singular or badly scaled. Results may be inaccurate warning where I assumed possible collinearity between some equations, I have reduced the system to the minimum variables but the warning persists and I am unable to simulate the model. My question:

  1. If Model diagnostics indicates that No obvious problems with this mod-file were detected. then is it safe to assume no collinear relationship between the equations or the near singularity instances are not detected by Model diagnostics.

  2. In your view, and again in attempt to solve the warning issue, do you think that numeric methods such as partial LU decomposition and/or regularization for ghu = - A_ \ fu (dyn_first_order_solver file as per returned msg) and dr.ghuu = A\rhs and dr.ghs2 = LHS\RHS in (dyn_second_order_solver) is okay to be applied or modelā€™s results will substantially change ? i.e. do you recommend such an approach to purge near singularity problem ?

Please accept my apologies if I burdened you with too many questions.
Copy_of_occ.mod (6.4 KB)

25

Your steady state has lambda=0. Is that expected?

26

You are right prof. , It must be positive.

27

But that could explain the error messages.

28

Definitely. Many thanks indeed

29

Many thanks prof. Will go over the FOC. But couldnā€™t be an issue of numeric computation whereby regularization of a matrix that causing the problem might solve the issue or Dynare does that automatically?

30

That may occasionally be the case but other mistakes are more likely.