Blanchard-Kahn indeterminacy error

Dynare help (legacy posts)
1

Hi,
I’m trying to solve a money-in-utility DSGE model in Dynare.
Got all the steady state and log linearized equations, but it keeps showing me the ‘‘Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy’’ error. What’s the problem? I have just as many equations as variables.
I attached my .mod file.
Thanks in advance!
Untitled2.mod (1.21 KB)

2

For starters

n=(1/(w+eta))*(lambda*z+(eta*k(-1)));
is not a linear equation, because it has a product of z and lambda, which are endogenous variables.

3

Thanks! I rewrote it in terms of Y, so now it’s additive.
It does run, but the values of the response functions are rather high (in the order of 1.5 for y).
Isn’t that strange?

4

You, the model builder, are the only one who can judge that. We others don’t know your model. In fact, we don’t even know which shock you are looking at. Generally, you should check the shock size if you think the IRFs are too big.

5

Thanks! I figured it out!