Walras law in dsge model


#1

Hello profosser
I check my model by model diagnosis, and its result is followoing:
The presence of a singularity problem typically indicates that there is one redundant equation entered in the model block, while another non-redundant equation is missing. The problem often derives from Walras Law.
Would you please help me to how i can find and eliminate redundant equation?
Can I omit the labor market? so what’s happen to other labor and wage variables in other equations, like production function?
Thanks for any helpa13971013.mod (14.1 KB)


Not good results in dsge model
#2

That is hard to debug. I can only recommend starting with a smaller model to see where the problem is.


#3

Hi professor
Would you please guide me to how i can simplify the model? Do you mean that i should remove, for example, the banking sector or change the functions or processes? if i remove one sector like banking system, then all the model would change. Is it possible?
Best Regards


#4

You should start from the most simply model that still works. That may mean removing problematic sectors.