Here is my code, the model is a two-agent new keynesian. The steady state of the model is accurate, but when I do stochastic simulations I get an error that blanchard kahn conditions are not satisfied and there is no stable equilibrium. When I try to run the model diagnostics command it states that there are no obvious problems with the mod file.
tankbond.mod (2.0 KB)
My hunch is that there is a problem in the setup. Most probably it’s related to the bond market clearing:
exp(bi)+(-exp(bh))+(-exp(bg))=0;