# Blanchard Kahn conditions are not satisfied in open economy model: **URL:** \ **Category:** Stochastic simulations\ **Created:** [13 October 2021 15:34 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083 "2021-10-13T15:34:09Z")\ **Posts on this page:** 11\ **Page:** 1
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [13 October 2021 15:34 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/1 "2021-10-13T15:34:10Z")
Dear All, I have incorporate open economy in informal financial economy. I got error in my simulation as ‘Blanchard Kahn conditions are not satisfied: indeterminacy’. I tried to change timings but it didn’t work. please help, code is attached.[openinform.mod](https://forum.dynare.org/uploads/short-url/gbWecrdHSKv7n0wJsxAMekArbnp.mod) (6.6 KB) ---
**Author:** ![kofiemma](https://forum.dynare.org/letter_avatar_proxy/v4/letter/k/439d5e/32.png) [@kofiemma](https://forum.dynare.org/u/kofiemma)\ **Post date:** [14 October 2021 01:40 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/2 "2021-10-14T01:40:36Z")
maybe you can get some clues from `model_diagnostics(M_,options_,oo_)` ---
**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:** [14 October 2021 07:22 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/3 "2021-10-14T07:22:40Z")
> [@No IRF in results](https://forum.dynare.org/t/no-irf-in-results/15435/4): > > I can only give you the generic advice: check every equation and variable for its timing. Apart from that ---
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [14 October 2021 07:28 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/4 "2021-10-14T07:28:09Z")
I have checked all equations and check for timing also. But didn’t get it ---
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [14 October 2021 07:28 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/5 "2021-10-14T07:28:39Z")
it tells ‘no obvious problem with mod-file’. ---
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [14 October 2021 07:41 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/6 "2021-10-14T07:41:44Z")
I start with simpler model and it works, but when I add open economy it tells ‘Blanchard conditions are not satisfied: indeterminacy’. Although I worked on timing also but model didn’t work ---
**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:** [14 October 2021 10:40 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/7 "2021-10-14T10:40:14Z")
That suggests a conceptual mistake at this step. ---
**Author:** ![kofiemma](https://forum.dynare.org/letter_avatar_proxy/v4/letter/k/439d5e/32.png) [@kofiemma](https://forum.dynare.org/u/kofiemma)\ **Post date:** [14 October 2021 12:19 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/8 "2021-10-14T12:19:27Z")
> [@madiha1986](#): > > Blanchard Kahn conditions Also, try changing the values of the parameters of the model. Let’s say you have a DSGE model AX\_{t+1} = BX\_t + DZ\_t, X = endogenous variables, Z\_t = exogenous variables. Then X\_{t+1} = A^{-1} BX\_t + A^{-1} DZ\_t. Blanchard Khan says the number of unstable eigenvalues of A^{-1} B must equal number of jump variables in X. A^{-1} B is a function of the DSGE model parameters and not all values of the parameters will satisfy BK conditions. Try other values for the parameters, maybe it will solve the problem. ---
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [16 October 2021 04:29 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/9 "2021-10-16T04:29:41Z")
thanks, I am also working on parameters. But it didn’t work also ---
**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:** [18 October 2021 07:36 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/10 "2021-10-18T07:36:50Z")
Again, this suggests a conceptual mistake somewhere. ---
**Author:** ![madiha1986](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/ad7895/32.png) [@madiha1986](https://forum.dynare.org/u/madiha1986)\ **Post date:** [18 October 2021 15:36 UTC](https://forum.dynare.org/t/blanchard-kahn-conditions-are-not-satisfied-in-open-economy-model/19083/11 "2021-10-18T15:36:33Z")
Yes it was. Problem is solved