I have a very simple NK model, No capital, CRRA utility, Permanent and Transitory TFP shocks, Calvo price setting. Parameter values are standard in the literature. I put the original equilibrium condition into dynare and want to solve the model use second order approximation. Blanchard Kahn conditions are always failed. Please help me look at the code, thank you very much.
There are 8 eigenvalue(s) larger than 1 in modulus
for 9 forward-looking variable(s)
The rank conditions ISN’T verified!
ModelHelp.mod (4.08 KB)