Blanchard-Kahn condition failure in the model

Stochastic simulations
1

Hi. I have two different linear DSGE models.
The equations of these models are the same without two equations in the model of
NEW_NKDSGE_MODEL_2

In the First model we have Taylor rule and in the second model monetary policy function and money growth rule as the monetary policy in economy such as undeveloped countries.

We I run the first model there is not any problem at all.

In the second model I have Blanchard-Kahn condition failure, although the equations of these models are the same as I mentioned above and only two equations are different.

How can I solve the Blanchard-Kahn error ?

I know that in 90 percent cases Blanchard-Kahn condition failure is due to the timming error for the state variables, but in this case all the equations of these models are the same without two equations, therefore it’s unlike that this error be for the timming problem.

Thanks so much.
NEW_NKDSGE_MODEL_1.mod (9.2 KB)
NEW_NKDSGE_MODEL_2.mod (4.7 KB)

2

Your model with the money growth rule exhibits explosiveness. That may be because the policy rule does not sufficiently stabilize the economy.

3

How can I solve this problem professor?
I changed the parameters of the model several times but this problem did not solve.

4

Then maybe it is a systematic problem with the type of rule you are using.