Dynare errors DSGE model

Stochastic simulations
1

Dear All,

I am using Dynare for the first time and I have met the following errors:

Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 100)
print_info(info, options_.noprint, options_);

Error in Assignment (line 142)
info = stoch_simul(var_list_);

Error in dynare (line 223)
evalin(‘base’,fname) ;

Is anybody able to help me?

These are my codes:

var pi x y yf r;
 
varexo u ey er;
 
parameters beta kappa mu1 mu2 alpha;
 
beta=0.995;
kappa=0.1;
mu1=0.5;
mu2=0.4;
alpha=0.00333;

model(linear);

pi=beta*pi(+1)+kappa*x+u;

x=y-yf;

yf=0.5*yf(-1)+ey;

r=mu1*pi+mu2*x+er;
 
x=x(+1)-alpha*(r-pi(+1))-(yf-yf(-1));
 
end;
 
shocks;

var u = 1;

var ey = 1;

var er = 1; 
 
end;
 
stoch_simul(order=1,irf=20,hp_filter=1600) pi x y yf r;

Thank you very much,
Manuel

2

mu1 has to be greater than 1: The Taylor principle.

Reuben

3

Thank you very much