Blanchard Kahn conditions are not satisfied: indeterminacy d

Dear professor jpfeifer:
When I run the shiyan.mod file in dynare, there is a trouble I don’t know how to solve it. The
error information coming up with the following message:

There are 5 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s)

The rank conditions ISN’T verified!

Error using print_info (line 46)
Blanchard Kahn conditions are not satisfied: indeterminacy due to rank
failure

Error in stoch_simul (line 81)
print_info(info, options_.noprint);

Error in shiyan2 (line 198)
info = stoch_simul(var_list_);

Error in dynare (line 120)
evalin(‘base’,fname) ;

Thank you very much for your help!
Best wishes!

the mod file as follows:
shiyan2.mod (944 Bytes)

First of all

does not seem to be right. I guess it should be z2 on the second line.

Second, your timing for the capital stock is wrong. See the manual on Dynare’s timing convention for predetermined states. But given that you seem to have two sectors, this will be more complicated than usual. You need to decide whether each of the individual capital stocks is predetermined, but the capital stocks can flow freely between sectors or whether capital used in each sector needs to be decided upon one period in advance and within the period a friction prevents capital from moving from one sector to the other one.

Dear professor jpfeifer:
Thank you very much for your help！Under the guidance of you，the problem has been solved. In equation z1=rho_z2*z2(-1)+e_z2;z1 should be z2.In fact, we have considered two sectors, there is something with the timing for the capital stock, we have changed it. You remind us------“the capital stocks can flow freely between sectors or whether capital used in each sector needs to be decided upon one period in advance and within the period a friction prevents capital from moving from one sector to the other one.” This is a very constructive suggestion，which give me a very important enlightenment.
Thank you very much for your help and support again!
Best wishes for you!
Yang

Dear jpfeifer
i am working on model but it has given error as " blanchard kahn conditions are not satisfied: indeterminacy" plz helpmadihafinal.mod (2.2 KB)

Your inflation feedback of `rhopie=0.15` does not satisfy the Taylor principle. It needs to be bigger than 1.

Dear jpfeifer,

I am working on model but it has given error as follows:

Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 100)
print_info(info, options_.noprint, options_);

Error in test (line 239)
info = stoch_simul(var_list_);

Error in dynare (line 235)
evalin(‘base’,fname) ;

test.mod (1.4 KB)

Appreciate if you can help me.

Check your equations. E.g. does it make sense that in steady state

``````r  		 -1.3275
dp 		 -1.3275
``````

?

Dear Jpfeifer,

Thanks for your response. However, after adjusting my equations, i still face the same problem.

test.mod (1.7 KB)

Appreciate if you can help me.

Are you sure that

``````cs=cs(+1)-(1/SIGMA)*(r-dp(+1));
``````

has the right sign and should not be

``````cs=cs(+1)-(1/SIGMA)*(dp(+1)-r);
``````

?

Thanks for your prompt response. I think cs=cs(+1)-(1/SIGMA)*(r-dp(+1)); has the right sign as it is supposed to negatively related to interest rate.

I see. It’s the standard Euler equation. But if I change that sign, the model runs. Strangely most of the model is just the standard NK model. Have you tried starting with that simpler model and seeing when the problem appears?

When I tried to relax the consumption constraint for unskilled worker to cu=cu(+1)-(1/SIGMA)*(r-dp(+1)); instead of cu=wu+lu;. I have error message as: Error using print_info (line 83)
Impossible to find the steady state. Either the model doesn’t have a steady state, there are an
infinity of steady states, or the guess values are too far from the solution.

I am not sure cu is the root cause of the problem.

Regards

It must have something to do with those equations. When I use

``````//% HH consumption
cu=wu+lu;
cu=cu(+1)-(1/SIGMA)*(r-dp(+1));
``````

the model runs.

Hi Jpfeifer,

Above comment refers. Could I please what does it really mean when I get an error message as: Error using print_info (line 83)
Impossible to find the steady state. Either the model doesn’t have a steady state, there are an
infinity of steady states, or the guess values are too far from the solution?

As //% HH consumption
cu=wu+lu;
cu=cu(+1)-(1/SIGMA)*(r-dp(+1)); does not really make sense.

Regards

Please provide the full file generating that error.

test1.mod (1.7 KB) Here is the file.

Dear Jpfeifer,

I hope you can help me on the above comment. Regards

All your steady state values need to be 0, including the one for `r`. Now your model has a unit root, explaining why the steady state cannot be found endogenously. This is most probably because the two consumption aggregates are perfect substitutes.

Dear professor jpfeifer,
I have the same problem in my model: “Blanchard & Kahn conditions are not satisfied: indeterminacy”, could please help me to figure out where is the mistake?moroco.mod (10.9 KB)