BK condition is not satisifed

Stochastic simulations
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Robot_rule1a.mod (12.6 KB)
Dear professor,
I am doing a two-area model. It reports the error that BK condition is not satisifed, The rank condition is not satisfied. However I have checked the timing of this model for many times. I believe it’s right , I don’t know the reason. Could you look at my code and help me to solve it? Many thanks.

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My reply to your earlier post

still applies. You need to simplify.

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Thanks professsor.
I have simplified my model, If I minimize the model to a one-area model,It can nomarlly run. However, when I add it to two-area model, it failed, I don’t know why, it’s very strange.

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Then something in closing the model causes the indeterminacy. Did you try different policy rules?

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Yes professor.
I have tried strictly inflation targeting rule, and I also tried to change the persistence coefficient of Taylor rule, I even tried to change the timing of the nominal interest rate. All failed. I am crazy, could you help to have a look at my code and figure out it?Thanks

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Then, there is most likely still a conceptual problem in the setup. That’s why I recommended a simpler setup. For example, try to figure out whether the problem is in one of the two sectors or affects both.

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See

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Dear professor, I need to set a passive tax rate rule. How can I solve this problem.
And How did you find this problem, why I didn’t realize it ？

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Your model features explosiveness. Usually, that means debt is not sufficiently stabilized. In your case, this suggests that the fiscal-monetary regime does not feature a unique stable equilibrium.

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Thank you professor.

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Dear professor, last question, how did you draw a conclusion that this model is explosive? How did you analyze it?

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The output is

There are 6 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s)

The rank condition ISN’T verified!

Error using print_info
Blanchard & Kahn conditions are not satisfied: no stable equilibrium.

No stable equilibrium means explosiveness.

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HaHaHaHa, thank you professor.