Hi there,
I’m new to dynare and am having trouble with coding a basic NK model from Gali. I’m getting a Blachard Kahn condition violation, which I understand tends to mean there’s a timing error in my model. However, I cannot seem to locate it and hope someone could help me identify the problem. Code is below:
%nkgali.mod
var ppi x ii y yn r rn a v z;
varexo eps_a eps_z eps_v;
parameters beta, rho_a, rho_v, rho_z, sigma, phi, alpha, epsilon, theta, mu, bigPhi, lambda, kappa, rho, psi_ya, psi_y, rho_i, phi_pi, phi_x, sig_a, sig_z, sig_v;
beta = 0.99;
sigma = 1;
phi = 5;
alpha = 0.25;
epsilon = 9;
theta = 0.75;
mu = log(epsilon/(epsilon - 1));
bigPhi = (1-alpha)/(1-alpha + alpha*epsilon);
lambda = (1-theta)(1-thetabeta)*bigPhi/theta;
kappa = lambda*(sigma+(phi+alpha)/(1-alpha));
rho = -log(beta);
psi_ya = (1+phi)/(sigma*(1-alpha)+phi+alpha);
psi_y = -(1-alpha)(mu-log(1-alpha))/(sigma(1-alpha)+phi+alpha);
rho_a = 0.9;
rho_v = 0.5;
rho_z = 0.5;
rho_i = 0.0;
phi_pi = 1.5;
phi_x = 0.5/4;
sig_a = 0.007;
sig_z = 0.03;
sig_v = 0.0031;
model;
ppi = beta * ppi(+1) + kappa * x ;
x = -sigma^(-1)*(ii - ppi(+1) - rn) + x(+1) ;
ii = (1-rho_i)rho + rho_iii(-1) + (1-rho_i)*(phi_pi * ppi * phi_x * x) + v ;
x = y - yn ;
yn = psi_ya * a + psi_y ;
rn = rho - sigma*(1-rho_a)psi_yaa + (1-rho_z)*z ;
r = ii - ppi(+1) ;
a = rho_a*a(-1) + eps_a ;
v = rho_v*v(-1) + eps_v ;
z = rho_z*z(-1) + eps_z ;
end;
initval;
ppi = 0;
x = 0;
ii = rho;
y = psi_y;
yn = psi_y;
r = rho;
rn = rho;
a = 0;
v = 0;
z = 0;
end;
shocks;
var eps_a = sig_a^2;
var eps_v = sig_v^2;
var eps_z = sig_z^2;
end;
stoch_simul(periods=0,irf=16,graph_format=pdf);
Thanks in advance!