BK condition not satisfied- already checked the taylor rule parameters and timing issue

Dear all,

I’m trying to run a model slightly different from the original one of Gerali(2010), the mod file is attached below
benchmark_model_1.mod (13.2 KB)
. However I confronted the problem “Blanchard & Kahn conditions are not satisfied: indeterminacy”. After checking the Taylor rule parameters and the timing of the model, I don’t know what else I can do.

Please help me if you have some insights.

Thank you!

What did you change compared to the original model? Did you start with a running version before doing modifications?

Dear Prof. jpfeifer

I change the original model setup for research purposes, though not completed yet. The running version of the original paper is provided by MMB, which I’ll attach below. I compared the timing of my modified model and the MMB version and didn’t notice obvious differences. In other word, I’m stuck…

Thank you for your reply!
EA_GNSS10_rep.mod (26.3 KB)

Then you need to go back to the working version and see what introduces a problem.

Dear Prof. jpfeifer,

Does that mean the error of the FOC condition, despite correctly calculated steady state and timing, may induces BK condition not satisfied?

Thanks for your reply!

The mistake can be anywhere. A mistake in the FOCs can also affect the steady state. So being able to compute the steady state is not sufficient.

Thank you Prof. jpfeifer!