Error: Blanchard & Kahn conditions are not satisfied: no stable equilibrium

[jpfeifer]

My guess is the problem is related to

Timing of capital in two sector economy

Hello all, I am building a two-sectoral model, and I have a question about the timing of sectoral-capital variables: In my model, T and N are sectors, hence kT is capital in sector T and kN is capital in sector N. Then, I assume that the economy’s aggregate capital is simply: k = kT + kN. However, I assume only one law of motion for aggregate capital such that: k = (1-delta)*k(-1) + i - written in Dynare language. It is clear to me that k is a predetermined variable and should be treated as su…

It seems strange to have

k=(1-lambda)*kNLC;

where both variables are predetermined.