Blanchard & Kahn conditions : no stable equilibrium

work.m (1.6 KB)
work.mod (6.5 KB)
somevarsolve.m (226 Bytes)
I encountered the following problem: Blanchard & Kahn conditions are not satisfied: no stable equiprium

Are you sure it’s not a matter of calibration, particularly the fiscal rules?

Is it a tax rule? Or something else. I want to ask specifically what is the problem?

As the message states, your model is explosive. In models with government debt, that usually means that government debt explodes, because the fiscal rules are insufficient to stabilize it.

Thank you, professor. I have solved the problem. As a newcomer to the problem of optimal monetary policy, I want to ask another question: is there a special routine for deriving the optimal monetary policy of any model. That is, whether there is a unified method to derive the optimal monetary policy. I find the derivation of Gali (2008) a little difficult.

It depends on the context. But if it’s a normal Ramsey problem, there is a generic routine for that. See for example