I am trying to implement a foreign interest rate shock in a 2-country version of the Gali Monacelli ('05) SOE paper, adapting the code made available by Johannes Pfeifer . However, when I run the simulation I get the following error:
Error using print_info (line 37)
The generalized Schur (QZ) decomposition failed. For more information, see the documentation for Lapack function dgges:
info=11, n=9. You can also run model_diagnostics to get more information on what may cause this problem.
I suspect it might be because I express the interest parity condition as backward-looking, but if I express it as forward-looking the Blanchard-Kahn conditions are satisfied.
Thanks in advance for any help.
SOE2country.mod (6.0 KB)