Eigenvalues larger than 1 in modulus for some forward-looking variables

Stochastic simulations
1

Hi,

I used dynare to run the attached code to try to replicate the results of a paper. However, it reported that

Blockquote
There are 5 eigenvalue(s) larger than 1 in modulus
for 6 forward-looking variable(s)
The rank condition ISN’T verified!
error: Blanchard Kahn conditions are not satisfied: indeterminacy

Then I employed the command " model_diagnostics". And it told me that

Blockquote
error: ‘M’ undefined near line 38 column 12
error: called from
model_diagnostics at line 38 column 10

I have no idea how to deal with it now. Is there anyone who can help me? I will really appreciate your help.

Best,

Samsonparams.m (780 Bytes)
main201808.mod (2.8 KB)
main201808_steadystate.m (4.8 KB)

2

How did you call the model_diagnostic routine? Did you pass M_, options_ and oo_ (in that order) as input arguments?

Best,
Stéphane.

3

Dear Stephane,

I first ran ‘dynare main201808’. It showed

Blockquote
There are 5 eigenvalue(s) larger than 1 in modulus
for 6 forward-looking variable(s)
The rank condition ISN’T verified!
error: Blanchard Kahn conditions are not satisfied: indeterminacy

In order to find a way dealing with it, I googled and found a kind of suggestion about using “model_diagnostics” from dynare forum. Then I typed “model_diagnostics” in command window and the following report showed up.

Blockquote
error: ‘M’ undefined near line 38 column 12
error: called from
model_diagnostics at line 38 column 10

Actually in my “main201808_steadystate.m”, I used “M_.params” and “M_.orig_endo_nbr” to calculate the steady state. Thank you.

Best regards,

Pin

4

To be sure, did you type the following:

>>  model_diagnostics(M_, options_, oo_)

But I am not sure that this command will help to understand why you have too many stable eigenvalues (indeterminacy).

Best,
Stéphane.

5

Dear Stephane,

I typed “model_diagnostics(M_,options_,oo_)”. Then the following result displayed.

Blockquote
model_diagnostics(M_, options_, oo_)
MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.

It sounds like it did not work. Is there any other way I can use?

Thank you,

Samson

6

You need to check the timing of your equations. For example, usually the FOC for consumption has forward-looking terms.

7

Dear Professor,

I got it. Thank you for your helpful advice. I eventually fixed my problem.

Best regards,

Samson

8

Dear Samson,

How did you fixed the problem, I have been facing same challenges for some weeks now. I have worked on the timing, but still having the same issue. I will appreciate if you can work me through. Thank you.

9

I’m dealing with the same problem. I’ve tried changing the calibration, but the problem persists. When I run the model, the following message appears:

Blockquote
There are 13 eigenvalue(s) larger than 1 in modulus
for 12 forward-looking variable(s)
The rank condition ISN’T verified!

The message is followed by:

Blockquote
Error using print_info (line 32)
Blanchard & Kahn conditions are not satisfied: no stable equilibrium.

However, when I run model_diagnostics, there are no error indications:

Blockquote
MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.

I send my .mod file and the m. file for calculating the steady state values (which are parameters in the already linearized model). Thank you in advance for any help.

test1_steadystate.m (8.7 KB)
test1.mod (9.5 KB)

10