PLEASE help, SOE with imperfect pass through

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PLEASE help, SOE with imperfect pass through

Postby Lexes9 » Fri Jul 08, 2016 2:47 am

I am trying to replicate "Monetary Policy in a Low Pass-through Environment" by Monacelli. Largely similar to Gali Monacelli 2005 but with imperfect exchange rate pass-through.

http://www.jstor.org/stable/3839027?seq ... b_contents
or
https://www.ecb.europa.eu/pub/pdf/scpwp ... 74e0f7ab1a

I am having trouble identifying the equilibrium conditions as I don't want to use the combined aggregate demand or supply equations. Instead i would like to be able to make changes (for example) to the euler equation later or view separately exports, imports and consumption of home goods. I am trying to introduce a Taylor rule and a monetary policy shock, but I get the following error:

model_diagnostic: the Jacobian of the static model is singular
there is 1 colinear relationships between the variables and the equations
Colinear variables:
e
w
p
ph
pf
Colinear equations
2 3 10 17 19 21 25
The presence of a singularity problem typically indicates that there is one
redundant equation entered in the model block, while another non-redundant equation
is missing. The problem often derives from Walras Law.
Error using print_info (line 54)
One of the eigenvalues is close to 0/0 (the absolute value of numerator and denominator is
smaller than 1e-06!


I have no idea on how to deal with it. I would appreciate any help. I would be very grateful if someone could take a look at my code.

Thanks.
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