Error Replicating RBC with Labor Market Search (Andolfatto, 1996)

General DSGE Modeling Replication Attempts
1

Hi everyone,

As part of broader project, I am trying to replicate Andolfatto (1996) (http://individual.utoronto.ca/zheli/D13.pdf), which is the basic RBC model with labor search embedded. I get the following error:

Preformatted textError using print_info (line 45) Blanchard Kahn conditions are not satisfied: indeterminacy

The mod file finds the steady state easily (thanks to the steady state values given in the paper), but something is wrong in the dynamics of the model. I would appreciate any insight to what is happening here!

Here is the mod file: andolfatto_v4.mod (2.8 KB)

Model description:

I am seeking to replicate the decentralized economy. The equilibrium in this model is described in the end of Section I. The equations are listed in a pdf attached to a comment below.

Thank you!
Matt

2

Equilibrium equations: andolfatto equilibrium equations.pdf (65.3 KB)

3

You forgot that some variables are predetermined:

predetermined_variables n k;

See the attached file.

andolfatto_v4.mod (2.8 KB)

1 Like
4

Works like a charm, thank you!