Dynare forums

Hi,
I am having trouble choosing the right initial values. I get the error message :
"
Some element of Newton direction isn't finite. Jacobian maybe singular or there is a problem with initial values
Error in model_diagnostics (line 65)
[dr.ys,params,check1]=evaluate_steady_state(oo.steady_state,M,options,oo,1); "
What I have done is that for some variables I chose the initial values equal to the steady state and for others I chose equal to log of steady state to avoid negative results.
Is there anyway I can fix this ?
Thank you in advance for your suggestions

I had a quick look at your file, and I get the impression you mix up which variables are in logs and which ones are not. In your model all variables are in logs, but your steady state variables don't seem to be in logs. So I think you should put a log in all your initial values.

For example in your model file you use: exp(Cif) whenever you use Cif, but your steady state value for Cif is kif_ss^Epsilon, which doesnt seem to be inl logs. If that is indeed true, then the initial value for Cif should be Cif = log(kif_ss^Epsilon)).

Thank you for your suggestion. I corrected that but I still a have the same problem.
any more suggestions?
I attached the updated file.
Thank you

If your initial values are supposed to be the true steady state values, either your computations or the model equations are wrong.

You should check the residuals of the equations, for the given initial values. That will tell you which equations is wrong (or which s.s. is wrong).

By the way, if you write the model in logs, like you did, then you should realize log(a*x^y) = log(a)+y*log(x) so you can get rid of a lot of your 'exp' expressions. Makes it more easy to read your code.

My advice to you is to actually start with a smaller model, because it seems you have hardly any experience with this. Therefore it seems wise to first get some experience with what you are doing....

thank you for your help