Step 1:
MODEL A: I solved a cost minimization problem using NLP. The results
for the endogenous variables Y look okay.
Step 2:
Then, I included one more equation (W) which calculates a new variable
(X).
The variable X is an expression based on the endogenous variables (Y)
of Model A.
This new equation (W) is included with Model A and solved – MODEL B.
In the presence of the equation W, the solution for endogenous
variables (Y) is
drastically different and does not make sense.
Why don’t the results for Model B make sense?
Is it due to numerical instability - how to correct it?
Thank you.
Subbu
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