Dynare timing convention with long term (perpetuity) bonds

General DSGE Modeling
1

Dear Professor Pfeifer,

I have a question on a timing convention in Dynare specific to my model. Please find attached my question in a PDF-file. Questions.pdf (89.7 KB)

I would appreciate your response.

Thank you very much for your help.

Best,
Archil

2

The translation from the model equations to the Dynare code looks correct. The only potential source of problems may be equation (4). The fact that there is a lot of stuff already fixed on the right-hand side may create problems with stability.

3

Thank you. I moved the equation (4) one period forward, and re-ran the code. Now it has 21 forward looking variables and 21 unknowns.

The rank condition is not satisfied.

Please see the error below.

pic
pic817×203 7.17 KB

I also have a model diagnostic command in the code, however, it does not show any collinearity between the variables.

I am confused how to solve this issue. May I send you my code?

Thank you very much for your help.

Best,
Archil