Dear Prof. Pfeifer,
I am trying estimate a dataset using Gali_2015_chapter_7 authored by you. I used Taylor Rule option only. I received following error;
error: Blanchard & Kahn conditions are not satisfied: no stable equilibrium.
Model diagnostics says;
MODEL_DIAGNOSTICS: there is 1 colinear relationships between the variables and the equations
I believe this is due to a redundant equation. Could you help me to fix this pls? (mod file and csv attached herewith.)
Lalinda
Test_1.mod (11.0 KB)
test_can.csv (383 Bytes)