Blanchard Kahn conditions


I have a little problem concerning the Blanchard Kahn condition. I know that in order to get a unique stable trajectory, you need to have as many eigenvalues larger than one in modulus than forward looking variables. This is the case in my model, but the error message saying that this condition is not satisfied still appears:

"There are 6 eigenvalue(s) larger than 1 in modulus
for 6 forward-looking variable(s)

The rank condition ISN’T verified!

??? Error using ==> print_info
Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure"

I cannot figure out why…

Could somebody help me?



Hi Annaig,

unstable eigenvalues == # forward looking variables

is not a necessary and sufficient condition for a unique stable solution. You also need to satisfy a rank condition. Look at slides page 13.

Blanchard & Kahn assume that the rank condition is satisfied (just before proposition 1 page 1308)