I am a beginner in estimating DSGE models. I was trying to replicate a DSGE model in a game theoretic framework estimated for Brazil economy using a quadratic loss function to estimate welfare. The Blanchard Kahn rank order condition is not satisfied. I have attached the paper from which i have coded the normal game simulation of Nash equilibrium for interaction between Monetary and fiscal policies. I’ll also attach the .mod file. Could anyone help in resolving the issue.
Your model features explosiveness, so your fiscal rules are insufficient to control debt.
Thank you sir for the reply. So then I must check the equation of fiscal rule and consider debt in that equation .