Hi, I am trying to replicate Eggertsson et al. (2019). However, I am getting Blanchard Kahn condition error. Since the the problem is indeterminacy, I am assuming the error is due to the timing but I am not sure which timing of the variable to fix to run the .mod file. If I can get any help, I would really appreciate it. I have attached the .mod file. If anyone is looking at the .mod file, I have placed approximate solutions for Y and l because it’s really difficult to get analytical solutions for Y and l. Below are the expressions for Y and l.
Expression for Y:
Expression for l:
Below are the Blanchard Kahn condition error and Equilibrium conditions along with equations. Since there are 21 equations and 22 unknowns (I think the authors forgot to include the natural rate of interest r^{n}_{t} as one their endogenous variables), I have decided to make the natural rate of interest to be a constant (that is, r^{n}_{t} = r^{n}):
Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy
Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);
Error in Eggertssonetal_Final (line 264)
info = stoch_simul(var_list_);
Error in dynare (line 180)
evalin(‘base’,fname) ;
Eggertssonetal_Final.mod (2.6 KB)