Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure - for semi structural model

Stochastic simulations Semistructural Modeling
1

Hello,

I am running into the following error while trying to get IRF from semi-structural new-Keynesian model. Everything seems fine into the equations, it says that

There are 5 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s),
but
The rank condition ISN’T verified!
and the error:
Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure

I am attaching the model code to this post. Can someone tell me what may be the problem,

Thanks.

Gap_model.mod (2.3 KB)

2

That typically indicates a fundamental singularity like including a redundant equation while at the same time missing an important one. Unfortunately, it’s not easy to debug. Usually it involves simplifying the model to see what causes it.

3

Thank you very much. I will try to simplify and find what equation causes it.