Blanchard Kahn conditions are not satisfied: indeterminacy

Dynare help (legacy posts)
1

Hi, everyone.

I was running a DSGE model based on dynare. But I am trapped by the following error:
There are 5 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s)

The rank condition is verified.

Initial value of the log posterior (or likelihood): -100000001.6102
Error in computing likelihood for initial parameter values
??? Error using ==> print_info
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in ==> initial_estimation_checks at 27
print_info(info)

Error in ==> dynare_estimation at 249
initial_estimation_checks(xparam1,gend,data);

Error in ==> test at 204
dynare_estimation(var_list_);

Error in ==> dynare at 26
evalin(‘base’,fname) ;

The main problem is the first one concerning B-K condition. I’ve search the forum and find a lot of posts on this issue. However, there are only ambiguous solutions generally saying that there maybe some problems with the model specification. And I can hardly figure out how to determine the problematic equation and how to fix it thereafter.

HELP! Thanks in advance!
test.mod (3.62 KB)

2

//Government fiscal constraint£¨²ÆÕþÔ¼Êø£© b(+1)=r+1/beta*(b-pih+(1-beta)*(tau-y)+CSS/BSS*(g-tau));//·½³Ì£¨14£©
looks strange. If b is bonds, you are violating Dynare’s timing convention (see the manual on how to treat predetermined variables like capital or bonds).

3

[quote=“jpfeifer”]//Government fiscal constraint£¨²ÆÕþÔ¼Êø£© b(+1)=r+1/beta*(b-pih+(1-beta)*(tau-y)+CSS/BSS*(g-tau));//·½³Ì£¨14£©
looks strange. If b is bonds, you are violating Dynare’s timing convention (see the manual on how to treat predetermined variables like capital or bonds).[/quote]

Thank you for locating the problematic equation for me. I’ve already fixed it!

4

[quote=“xiang8482890”]

[quote=“jpfeifer”]//Government fiscal constraint£¨²ÆÕþÔ¼Êø£© b(+1)=r+1/beta*(b-pih+(1-beta)*(tau-y)+CSS/BSS*(g-tau));//·½³Ì£¨14£©
looks strange. If b is bonds, you are violating Dynare’s timing convention (see the manual on how to treat predetermined variables like capital or bonds).[/quote]

Thank you for locating the problematic equation for me. I’ve already fixed it![/quote]

Can you please post the final version of your dynare code?
Thanks in advance.

Andrea