Dynare forums

Hi,
I'm trying to simulate the attached model and the following error message appears:

??? Error using ==> chol
Matrix must be positive definite.

Error in ==> simult at 77
chol_S = chol(DynareModel.Sigma_e(i_exo_var,i_exo_var));

Error in ==> stoch_simul at 139
[ys, oo_] = simult(y0,oo_.dr,M_,options_,oo_);

Error in ==> Unburdening at 344
info = stoch_simul(var_list_);

Error in ==> dynare at 162
evalin('base',fname) ;

Could anyone help me?

The problem is that your first covariance matrix implies a perfect correlation between two shocks. This obviously makes the covariance matrix singular, leading to the crash in the Cholesky decomposition.

Johannes,

Thank you very much for the help.

regards