Hi, I met a serious problem that after I ran my .mod file I got the following error message:

*Error using print_info (line 42)*

*Blanchard Kahn conditions are not satisfied: no stable equilibrium*

*Error in stoch_simul (line 100)*

*print_info(info, options_.noprint, options_);*

*Error in Iaco_Add_Tax (line 647)*

*info = stoch_simul(var_list_);*

*Error in dynare (line 235)*

*evalin(‘base’,fname) ;*

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Here are so many similar problems on the forum, but most of them got error message from

model_diagnostics(M_,options_,oo_)

But model_diagnostics told me that **no obvious problems with this mod-file were detected!**

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Follow the discusses on the forum before, it is possible that there is a timing problem. But I can’t figure out where it is! I really need your help

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The model what I compile is just adding the government to the Iacoviello(2010) mod file.

And the equations I added to the model are just the following four:

(1) exp(bg) + 2*exp(T) = E + exp(r(-1)-dp + bg(-1)) ;

(2) E = RHO_E*E(-1) + (1-RHO_E)

PSI_Y(Y - Y_SS) + (eps_e);(3) exp(TRATE) - TRATE_SS = RHO_T*(exp(TRATE(-1)) - TRATE_SS) + (1-RHO_T)

( DELY(Y-Y_SS) + DELB*(exp(bg(-1))-BG_SS) + DELE*(exp(E)-1) );(4) exp(T) = exp(TRATE + Y)/2;

The first equation is the government’s budget constraint; the second one is a equation to describe the movement of government expenditure; the third one is a equation to describe the movement of government lump-sum tax ratio; and the forth one is the definition of lump-sum tax which is applied to both the unconstrained and constrained household.

In addition to these four new equations, I only add an identical lump-sum tax and transfer to both the unconstrained and constrained household and leave all the other variables as unchanged; and where I compile as follows.

exp( c ) + exp(kc)/exp(a_k) + exp(kh) + exp(q+h) + exp(b) + exp(bg) = (1-DH)*exp(q+h(-1)-TRENDH) + exp(wc+nc) + exp(wh+nh) + (1-1/exp(X))

exp(Y) + exp(r(-1)-dp)(exp(b(-1))+exp(bg(-1))) + (exp(rkc+zkc)+(1-DKC)/exp(a_k))*exp(kc(-1)-TRENDK) + (exp(rkh+zkh)+(1-DKH))exp(kh(-1)-TRENDY) + MULexp(q)exp(I) - exp(T) + KAPPA_TE/2;exp(c1) + exp(q+h1) - (1-DH)

exp(q+h1(-1)-TRENDH) = exp(wc1+nc1) + exp(wh1+nh1) +E/2;

exp(b) - exp(r(-1)-dp+b(-1)-TRENDY) - exp(T) + KAPPA_T

I think all these equations are seemed to be normal…?

Could you please have a look and give me some hint how to find the mistake?

Thanks!

Iaco_Add_Tax.mod (20.5 KB) Iaco_Add_Tax_steadystate.m (5.2 KB)