Hi all!
I am working on a housing model. I am very new to Dynare programme. When I run the model, it says: There are 5 eigenvalue(s) larger than 1 in modulus for 6 forward-looking variable(s)
The rank condition ISN’T verified!
Error using print_info (line 45) Blanchard Kahn conditions are not satisfied: indeterminacy.
Does someone have an idea how to overcome this problem?
I appreciate any help that you can provide.
var
c uc kc kh q h b w L rkc
c1 uc1 h1 b1 w1 L1
ce uce b_e D I
lm lme R Y C j
;
varexo Eps_i eps_j;
parameters BETA BETA1 BETAE M MUC MUD DKC DKH DH ETA FIKC ALPHA
rho_j theta_y
%稳态
css kcss khss qss hss bss wss Lss rkcss
jss c1ss h1ss b1ss w1ss L1ss cess
b_ess Dss Iss Yss Rss;
//% Calibrated parameters
BETA = 0.9925 ;
BETA1 = 0.9878 ;
BETAE = 0.9765 ;
MUC = 0.5;
MUD = 0.6;
DKC = 0.025 ;
DKH = 0.025 ;
DH = 0.0125;
M = 0.5 ;
rho_j = 0.9;
theta_y = 0.3;
ALPHA = 0.8 ;
ETA = 1 ;
FIKC = 14.47013 ;
%========================================================
%%计算解析解
jss = 0.4;
Rss = 1/BETA;
rkcss = 1/BETA - (1-DKC);
a = 1-M*(BETA-BETAE);
d = 1-DKH*(1-MUD)/(1/BETAE-1+DKH)-MUD/a*(1+(Rss-1)*M/Rss);
e = jss/(1-BETA+BETA*DH);
f = jss/(1-BETA1+BETA1*DH-M*(BETA-BETA1));
kc_Y = MUC/rkcss;
c1_Y = (1-ALPHA)*(1-MUC)/(1+(DH+(Rss-1)*M/Rss)*f);
A = 1-c1_Y-DKC*kc_Y;
B = (d+DKH*(1-MUD)/(1/BETAE - (1-DKH))+MUD/a)*DH;
c_Y = (A-B*f*c1_Y)/(1+B*e);
QIY = DH*(e*c_Y+f*c1_Y);
Lss = (ALPHA*(1-MUC)/c_Y)^(1/(1+ETA));
L1ss = ((1-ALPHA)*(1-MUC)/c1_Y)^(1/(1+ETA));
Yss = Lss^ALPHA*L1ss^(1-ALPHA)*(kc_Y)^(MUC/(1-MUC));
QI = QIY*Yss ;
Dss = MUD*QI/a;
kcss = kc_Y*Yss;
khss = (1-MUD)*QI/(1/BETAE - (1-DKH));
Iss = khss^(1-MUD)*Dss^MUD;
qss = QIY*Yss / Iss ;
css = c_Y*Yss;
c1ss = c1_Y*Yss;
cess = d*QI;
hss = e*css/qss;
h1ss = f*c1ss/qss;
wss = ALPHA*(1-MUC)*Yss/Lss;
w1ss = (1-ALPHA)*(1-MUC)*Yss/L1ss;
b1ss = M*qss*h1ss/Rss ;
b_ess = M*Dss/Rss;
bss = b1ss+b_ess;
model ;
//% Patient households
//% 1
c + kc + q*h + b =
(1-DH)*q*h(-1) + w*L + (rkc+(1-DKC))*kc(-1) + R(-1)*b(-1) ;
//% 2
q*uc = j/h +
BETA*(1-DH)*(q(+1)*uc(+1));
//% 3
uc = BETA*R*uc(+1);
//% 4
uc * ( 1 + FIKC*((kc/kc(-1))-1 ) ) =
BETA * (uc(+1))
* ( (rkc(+1)) + (1-DKC) + FIKC/2*((kc(+1))^2/((kc))^2-1)) ;
//% 5
L^ETA = uc*w;
//% Impatient households
//% 6
c1+q*h1+R(-1)*b1(-1)=w1*L1+q*(1-DH)*h1(-1)+b1;
//% 7
q*uc1 =j/h1+BETA1*(1-DH)*q(+1)*uc1(+1)+M*lm*q(+1)/R ;
//% 8
b1 = M*q(+1)*h1/R ;
//% 9
uc1 = BETA1*uc1(+1)*R + lm ;
//% 10
L1^ETA = uc1*w1;
//Firm
%housing sector
//% 11
I = kh(-1)^(1-MUD)*D^MUD;
//% 12
BETAE*(1-MUD)*q*I/kh(-1) = uce(+1)/uce-(1-DKH)*BETAE;
%13
MUD*q*I*uce/D-uce+lme*M/R=0;
%14
lme = uce-uce(+1)*BETAE*R;
%15
b_e = M*D/R;
%16
Y = (L^ALPHA*L1^(1-ALPHA))^(1-MUC)*kc(-1)^MUC;
%17
(1-ALPHA)*w*L = ALPHA*w1*L1;
rkc*kc(-1)*ALPHA*(1-MUC) = MUC*w*L;
%19
%20-22
uc = 1/c;
uc1 =1/c1 ;
uce = 1/ce ;
%23-26
c+c1+ce+D+kh-(1-DKH)*kh(-1)+kc-(1-DKC)*(kc(-1)) = Y;
h+h1-(1-DH)*(h(-1)+h1(-1))=I;
b = b1+b_e;
C = c+c1+ce;
%46-48
//货币政策
//利率变动根据 （pi_d、国内外利率差、Y_d偏离稳态水平) 调整
log(R) - log(Rss) = theta_y*(log(Y)-log(Yss)) - Eps_i ;
log(j) = (1-rho_j)*log(jss) + rho_j * log(j(-1)) + eps_j ;
end;
%========================================================
steady_state_model;
c = css;
kc = kcss;
kh = khss;
q = qss;
h = hss;
b = bss;
w = wss;
L = Lss;
rkc = rkcss;
c1 = c1ss;
h1 = h1ss;
b1 = b1ss;
w1 = w1ss;
L1 = L1ss;
ce = cess;
b_e = b_ess;
D = Dss;
I = Iss;
uc = 1/css;
uc1 = 1/c1ss;
uce = 1/cess;
lm = uc1-Rss*uc1*BETA1;
lme = uce-uce*BETAE*Rss;
R = Rss;
Y = Yss;
j = jss;
C = css+c1ss+cess;
end;
steady;
check;
%========================================================
shocks;
var Eps_i; stderr 0.002;
var eps_j;stderr 0.025;
end;
stoch_simul(order = 1 , irf = 20 ) C q ;