hi, I got an error saying that “Blanchard & Kahn conditions are not satisfied: indeterminacy.”
my code is as below:
var Y K C p n w r A g i;
varexo e_g e_A;
parameters beta sigma gamma delta theta rho_A rho_g B sigma_A sigma_g g_bar A_bar;
beta = 0.99;
sigma = 1.5;
gamma = 2;
delta = 0.025;
theta = 0.33;
rho_A = 0.9;
rho_g = 0.5;
B = 2.291;
sigma_A = 0.01;
sigma_g = 0.01;
g_bar = 1.02;
A_bar = 1;
model;
(1/beta) * n^(1/gamma) / (n(+1))^(1/gamma) = (w / (w(+1))) * ((r(+1)) + (1 - delta));
n^(1/gamma) * B * (g(+1)) * (p(+1)) / w = beta * p / (C(+1))^(-sigma);
w = (1-theta)*A*K(-1)^(theta)*n^(-theta);
r = theta*A*K(-1)^(theta-1)*n^(1-theta);
i = K-(1-delta)*K(-1);
C + i = w * n + r * K(-1);
p = 1/C;
Y = A*K(-1)^(theta)*n^(1-theta);
log(g) = rho_g*log(g(-1))+(1-rho_g)*log(g_bar)+e_g;
log(A) = rho_A*log(A(-1))+e_A;
end;
initval;
r = (1/beta)-1+gamma;
A = A_bar;
w = (1-theta)*A*((r+gamma)/theta*A)^(theta/(1-theta));
g = g_bar;
n = 1/3;
C = 1;
K = 1;
p= 1;
Y = C + gamma*K;
i = gamma*K;
end;
shocks;
var e_g = (sigma_g)^2;
var e_A = (sigma_A)^2;
end;
steady;
stoch_simul(order=1,irf=20,hp_filter=1600) Y K C p n w r A g i;
could someone let me know what is the problem? since steady state is derived, foc doesn’t seem to be a problem.
thanks in advance!