BK condition not satisified

Dear All,

I’m new to DYNARE and I am trying to replicate a paper done by Gupta and Steinbach (2013), however, I have been having challenges simulating the model and obtaining steady state values. Kindly find attached my mod file, and the paper. I would be grateful if I can get some assistance.

Best Regards,

Test.mod (1.7 KB)
DSGE Modeling South Africa.pdf (737.1 KB)

Your model is linear, so the steady states are 0. That part is correct. But you may have a timing problem, because

There are 2 eigenvalue(s) larger than 1 in modulus 
for 6 forward-looking variable(s)

Please recheck all equations. For example in

ys = h*ys(-1)+(sigma/zeta)*c-h*c(-1)-(1-h/zeta)*q;

There seems to be a bracket missing around

c-h*c(-1)

Thank you very much, what can be done to correct the case of 2 eigenvalues larger than 1

As I said, first of all, make sure your model equations are entered correctly. Often this already solves the issue.

1 Like

I have looked at the model and corrected the places missing a bracket. I ran the analysis again and I kept on getting the same response concerning the eigenvalues greater than one. Attached is the new mod fileTest.mod (1.7 KB)