I am trying to replicate the results from “Energy and Capital in a New Keynesian Framework” (halshs.archives-ouvertes.fr/hal … 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:
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)