Hi all, So I’m trying to set up and run a small two country open economy model as my master thesis, this model to be precise: https://ars.els-cdn.com/content/image/1-s2.0-S0164070421000513-mmc1.pdf I get the following error message when running the code: “Blanchard & Kahn conditions are not satisf…

True. And the model works, but I do get a message after the estimation of a possible issue. I could exclude the foreign variables in the VD since I’m mostly interested in the domestic ones etc dataset1.mat (8.7 KB) model.mod (7.9 KB) .

It’s hard to tell what is going on in this model, but dropping the foreign sector may be a solution.

Well, one of the reasons I chose this model was that the foreign economy is modelled explicit. Anyway, I’m probably going to drop the irf analysis and focus on estimation of parameters, VD and optimal policy. What I want to do is to find the optimal monetary policy weights in this estimated model w…

What exactly are you trying to do? estimation under optimal policy? Or estimating the model and then checking what would happen under optimal policy?

I want to estimate the model, VD from stoch_simul (which timeperiod is displayed in the matlab window? Or is it an average?) and then an optimal policy analysis of the monetary policy, like minimize the variances of inflation, output and interest rate?

When I use moments_varendo in the estimation, I get the following error: “Error using compute_decision_rules Too many output arguments.” Thoughts?

This looks like a bug. Can you please provide the full error message?

A fix is at posterior moments: fix bugs that cause crashes (!2006) · Merge requests · Dynare / dynare · GitLab

Thank you. I was trying to run conditional VD in the estimation command, but I switch to the stoch_simul (as discussed above earlier) and I’m fine with that. Anyway, I still doesn’t manage to get perfect Brooks and Gelman (1998) plots, this is the best I’ve got [Screenshot 2022-03-14 at 18.31.20] …

I find these diagnostics very hard to interpret. How do the trace_plots look like?

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Blanchard & Kahn conditions are not satisfied: no stable equilibrium & The Jacobian of the static model is singular

Stochastic simulations