Eigenvalues and BK conditions (65 Log-Lin Equations)


Hi everyone,

I’m a master student and I have developed for my master thesis a DSGE of Euro Area.
It’s the first time I used Dynare and my model is very complicated (at least for my preparation).
Specifically, I tried to log-linearize it and to solve my SS Variables making Great Ratio.
I found after that dynare doesn’t accept Ratio in parameters initialization and for this reason, i decided to insert real values of Italy and Europe so that it would be the model to calculate the ratio itself.
In this version, I haven’t yet all the behavioral parameters, but trying to simulate my model with some literature parameter dynare gives me the following error.
Sorry if I’m not an expert but this is the first time I do something so complicated.
I would be really grateful for your help.LDG.mod (13.1 KB)

**_There are 14 eigenvalue(s) larger than 1 in modulus _**
**_for 14 forward-looking variable(s)_**

**_The rank condition ISN'T verified!_**

**_Warning: stoch_simul: using order = 1 because Hessian is equal to zero _**
**_> In stoch_simul (line 41)_**
**_  In ldgcorretto (line 904)_**
**_  In dynare (line 235) _**
**_Error using print_info (line 48)_**
**_Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure_**
**_Error in stoch_simul (line 100)_**
**_    print_info(info, options_.noprint, options_);_**
**_Error in ldgcorretto (line 904)_**
**_info = stoch_simul(var_list_);_**
**_Error in dynare (line 235)_**
**_evalin('base',fname) ;_**


You did not upload the most recent file. There are missing parameter initializations in the file you provided.

The usual advice in cases like yours is to start with a simpler working version of the model and only then add features to it. When people start with models of that size, it is usually a recipe for disaster.


Dear Professor,

i really thank you for your answer. I know the model is very big but with help of my supervisor now it’s completed, running very well with four different scenario.

If it’s permitted i’d like to ask you something according to axis range in IRFs plots.
I want to compare every variable obtained in different scenarios and shocks overlapping theirs curves.
But some of them goes down the 0 y-axis value and some to the top.
There is a way to say to my mods file to put in every mod the same range for y-axis so to overlap (with my graphics programs) the IRFs of the same variables?? For example putting the zero y-axis value to the center of every plot??


There is no options in Dynare to control the look of the IRFs plots. So the only solution is to do what you want using matlab plotting commands. All the computed IRFs are saved under oo_.irfs (see the reference manual).



Dear Stèphane,

I really thank you for your answer.
I think i will search for other instruments as some external graphic software.

Thank You,
Best Regards


Yes, it is possible if you use any language able to load and read mat files, for instance R or Python, since the oo_ global structure is saved in a file called <NAME_OF_THE_MOD_FILE>_results.mat. Otherwise you will need the content of oo_.irfs in another format.



Oh Perfect.
So, I will try with R to do that.

Thank you very much Stéphane

Best Regards


Then you will just need this.



Perfect!! I will let you know if everything is going to be right!!

Thank you


Dear Professors,

Model Works.

But still one big problem about shocks in public spending. When i Run my model (symmetric between italy and Europe) the shock in public spending in country i denotes a push of debt in country f and the contrary at the same time for the country f.
But why?? if i impose correct shocks in correct debt equations why they act in this symmetric way with debt??Fasezero.mod (11.4 KB)

(bi, bf are the equations of debts) Model is in log-lin version.


Maybe I have solved the problem deleting from the households budget constraint the foreign debt and from taxes the income from the same bonds, as well.

I’d like to know from your experiences if it could be a correct solution


For plotting, Q: combining IRFs into subplotted figures & iterating? may be relevant.
For the economic question, I did not get the problem. Why do you think the IRFs make no sense?


Because, as my supervisor told me, it is not realistic theoretically that a positive shock in public spending (Gi) in domestic country has a negative impact on debt of the same country by assumption from the Debt equation B=rB(-1)+G-T

Now i have imposed some differences in taxes equation and seems to be right according to the economic theory framework cited above.

New file is: Fasezero.mod (11.3 KB)


Specifically Fig 14 for domestic country spending shock Bi and Bf (i: domestic, f: foreign) and Fig 20 for foreign countries

(We think this is correct. The first fasezero.mod file i sent (Eigenvalues and BK conditions (65 Log-Lin Equations)) had on the contrary an asymmetric problem in these figures)