I’m trying to replicate Akinci & Queralto (2019) (code attached).
Dynare is telling me I have 39 eigenvalues with absolute value above 1 for 38 forward-looking variables.
In contrast to previous posts pointing to similar issues, by counting the number of variables that enter with a lead I think the 38 number is right. Does this necessarily imply there is an error with the calibration / steady state? (which would in turn affect the eigenvalues)
The model_diagnostics function says there are no obvious problems with the model.
Akinci_Queralto_medium_forum.mod (31.4 KB)