Warning: Matrix is close to singular or badly scaled

Dynare help (legacy posts)
1

Hi everyone

I am starting to use dynare, I tried to solve a simple model and
I get Warning: Matrix is close to singular or badly scaled.
In th_autocovariances at 149
In disp_th_moments at 37
In stoch_simul at 164
In basic_model at 120
In dynare at 180

I don’t know what is wrong with my code.
Could you give me some suggestions, please?
Thanks in advance
Jocy
basic_model.mod (681 Bytes)

2

Note first that this is a warning, not an error. This seems to be a matter of a parameterization that leads to numerical issues. When you use

beta = 0.99;
nu = 2;
rho = 0.6;
sigma = 1;
r=1/beta-1;

there is no warning message.