Hi there everyone,

I have the following model (this is naturally a simplified version just for
showing my problem, in case you're wondering this is a translog cost
function with the associated cost share equations):

C ~ á + â1 log X + â2 log Y + ă1 log Z + ă2 log XX
C1 ~ â1 + â2 log YY + ă1 log ZZ

Then I have some restrictions on the coefficients, namely that the sum of â
equal 1 and the some of ă equal zero
So, I've added the following equations to the model

C2 ~ 0 +  â1.Y1 + â2.Y2
C3 ~ 0 +  ă1.Y3 + ă2. Y4

I've created columns in my data frame with values of 0 for variable C3 and
values of 1 for Y1, Y2, Y3, Y4 and C2

I'm using the systemfit package to solve a multiple equation system using
the SURE method, and using a matrix to impose the restrictions on the
coefficients (i.e., that the â1 in all equations is the same value, and the
same for all the other coefficients).

When I try to run the model without the restricting equations (C2, C3) it
runs just fine, but when I add these two equations I get the error:

"Error in solve(xtOmegaInv %*% xMat2, xtOmegaInv %*% yVec, tol = solvetol)
:
  cs_lu(A) failed: near-singular A (or out of memory)"

Any ideas on what the problem might be?

All the best,
Rui Neiva

P.S.: I've also posted this question on the Matrix help forum, but since I
do not know how active that forum is I've decided to see if anyone in the
mailing list would be able to help.

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