Help with OSR command!!! Value of objective funtion is Inf!!

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Help with OSR command!!! Value of objective funtion is Inf!!

Postby roscoe » Thu Jun 13, 2013 3:32 pm

Hi,there
I wrote a model incorpoarting bank's balance sheet effect and tried to use osr command in computing optimal interest rate rule.
I use common objective function where inflation and output are included, and set weight to 1000 as it is said low values may cause difficulties.
Nevertheless, I can not obtain meaningful result. After interations dynare reports(code named bank1osr is attached):

Improvement on iteration 1001 = NaN
iteration count termination
OPTIMAL VALUE OF THE PARAMETERS:
icpi 1

icy 1

Objective function : Inf

where icpi and icy are parameters in interest rate rule. The model block has no problem and you can run impulse response as you like,while I just can not get optimal simple rule.
What has gone wrong??? I have no idea!!!
The code is attached. I really appreciate it if someone can help.
Attachments
bank1osr.mod
The dynare code!
(3.68 KiB) Downloaded 86 times
roscoe
 
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Joined: Thu Jun 13, 2013 2:55 pm

Re: Help with OSR command!!! Value of objective funtion is I

Postby roscoe » Sat Jun 15, 2013 5:49 am

I come to reply to myself...The problem comes from the model I borrow from Gertler and Karadi,in which a unit root exists. I therefore remove it by adding some adjustment costs.
roscoe
 
Posts: 2
Joined: Thu Jun 13, 2013 2:55 pm

Re: Help with OSR command!!! Value of objective funtion is I

Postby selima » Tue Jun 25, 2013 3:57 pm

you can verify the model of gertler and Karadi in http://www.macromodelbase.com/ web site .It is called NK_GK09
selima
 
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Joined: Thu Jan 10, 2013 5:13 pm


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