one of the eigenvalues is close to 0/0

[karl0212]

Hi, I am replicating the results of the paper of Bernanke and Gertler 2000 (Monetary policy and asset price volality) and there are some problems with my code. DYNARE indicates that one of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is smaller than 1e-6). I have checked my code several times, but still can not figure out what is going wrong. I would really appreciate it, if someone could help me out. Many thanks in advance!

[peter487]

See previous topic for similar problem:
http://www.dynare.org/phpBB3/viewtopic.php?f=1&t=3625

In your case:

model_diagnostic: the Jacobian of the static model is singular
there is 1 colinear relationships between the variables and the equations
Colinear variables:
pi
Colinear equations
5 6 7 8

Focus on equations containing this variable, there might be some problems with your parameters value.

[karl0212]

Peter, Thanks a lot!

[Doyle33]

Helpful work peter.. Thnx