# BK conditions are not satisfied

**URL:** <https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371>\
**Category:** Stochastic simulations\
**Created:** [6 September 2018 17:32 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371 "2018-09-06T17:32:22Z")\
**Posts on this page:** 7\
**Page:** 1

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**Author:** ![Xiang](https://forum.dynare.org/letter_avatar_proxy/v4/letter/x/9fc348/32.png) [@Xiang](https://forum.dynare.org/u/Xiang)\
**Post date:** [6 September 2018 17:32 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/1 "2018-09-06T17:32:22Z")

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Hi everyone,  
I’m trying to replicate the paper “Financial Intermediation and Credit Policy in Business Cycle Analysis”(Mark Gertler and Nobuhiro Kiyotaki,2010).I wrote the formula to the file as described in the article. However, BK conditions are not satisfied: indeterminacy  
Any help would be greatly appreciated.  
Many thanks,  
Xiang[LGK.m](https://forum.dynare.org/uploads/default/original/2X/b/b69ee0785af66f7140ebb0f14963dda52b4d0474.m) (19.6 KB)

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [8 September 2018 13:41 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/2 "2018-09-08T13:41:18Z")

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You only provided the m-file, not the mod-file

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**Author:** ![Xiang](https://forum.dynare.org/letter_avatar_proxy/v4/letter/x/9fc348/32.png) [@Xiang](https://forum.dynare.org/u/Xiang)\
**Post date:** [9 September 2018 14:11 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/3 "2018-09-09T14:11:32Z")

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Sorry Prof. Jpfeifer, I have upload the mod-file. By the way, I have linearized the model and give the steady state, and the results shows that "??? Error using ==\> eig  
Input to EIG must not contain NaN or Inf.

Error in ==\> stochastic\_solvers at 239  
dr.eigval =  
eig(kalman\_transition\_matrix(dr,nstatic+(1:nspred),1:nspred,M\_.exo\_nbr));

Error in ==\> resol at 144  
[dr,info] = stochastic\_solvers(dr,check\_flag,M,options,oo);

Error in ==\> check at 73  
[dr,info,M,options,oo] = resol(1,M,options,oo);

Error in ==\> LGK at 534  
oo\_.dr.eigval = check(M\_,options\_,oo\_);

Error in ==\> dynare at 235  
evalin(‘base’,fname) ;"  
[LGK.mod](https://forum.dynare.org/uploads/default/original/2X/5/5b785a200e34309cbc9015d2f3e521427c65c229.mod) (6.1 KB)

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [10 September 2018 08:29 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/4 "2018-09-10T08:29:35Z")

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Your linearization must be wrong. The equation

```auto
MUi*mui -pii*OMEGAi*beta*RKii*wrkii-pin*OMEGAn*beta*RKin +beta*(pii*OMEGAi*RKii+pin*OMEGAn*RKin)*r -pii*OMEGAi*(beta*RKii-1)*womegai -pin*OMEGAn*(beta*RKin-1)*womegan =0; // mui

```

has a constant term

```auto
pin*OMEGAn*beta*RKin

```

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<div class="post-metadata">

**Author:** ![Xiang](https://forum.dynare.org/letter_avatar_proxy/v4/letter/x/9fc348/32.png) [@Xiang](https://forum.dynare.org/u/Xiang)\
**Post date:** [10 September 2018 09:11 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/5 "2018-09-10T09:11:09Z")

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Sorry Prof, I have correct the equation, however, I still don’t solve my questions.  
[LGK.mod](https://forum.dynare.org/uploads/default/original/2X/d/da06de51ac5fd72b301fc883e78b7bd70c2c8661.mod) (6.1 KB)

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [13 September 2018 08:54 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/6 "2018-09-13T08:54:33Z")

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Sorry, but I also don’t see where the problem is. I can only recommend to check all equations again, particularly with respect to the timing.

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**Author:** ![Xiang](https://forum.dynare.org/letter_avatar_proxy/v4/letter/x/9fc348/32.png) [@Xiang](https://forum.dynare.org/u/Xiang)\
**Post date:** [13 September 2018 09:14 UTC](https://forum.dynare.org/t/bk-conditions-are-not-satisfied/12371/7 "2018-09-13T09:14:51Z")

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Get it. I will check the equations carefully. Thank you for your patience.