Help --blanchard kahn conditions

Dynare help (legacy posts)
1

I’m simulating a model based on Monacelli (2006). I keep getting Blanchard-Kahn indeterminacy, but the number of eigenvalues larger than 1 in modulus is equal to forward-looking variables’. I would really appreciate it if someone could take a look and point me in the right direction. Thanks a lot!

There are 9 eigenvalue(s) larger than 1 in modulus
for 9 forward-looking variable(s)

The rank conditions ISN’T verified!

??? Error using ==> print_info at 58
Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure

Error in ==> stoch_simul at 44
print_info(info);

Error in ==> hp_simul at 332
info = stoch_simul(var_list_);

Error in ==> dynare at 102
evalin(‘base’,fname) ;
hp_simul.mod (2.87 KB)

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2

The problem is that the rank condition is not satisfied. This usually means you have perfect collinearity in the sense that one equation you entered is completely implied by the others. Hence, one equation might be missing while one of the others is redundant (often due to Walras Law).

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