How to create Forward-looking dummy equation


I am trying to replicate the results from “Energy and Capital in a New Keynesian Framework” ( … 6/document) and get the following error:

STOCHASTIC_SOLVER: Dynare does not solve purely backward models at higher order.
STOCHASTIC_SOLVER: To circumvent this restriction, you can add a forward-looking dummy equation of the form:
STOCHASTIC_SOLVER: junk=0.9*junk(+1);

I am new to Dynare so don’t know how to create a forward-looking dummy equation and can’t seem to find anything online. Any help on this would be massively appreciated.

Practice.mod (1.84 KB)

Just define a variable

and add the equation