How to link 2 symmetric countries

Stochastic simulations
1

Hi,

I have a model running correctly for as an autarky but when I introduce symmetric economy and link them through asset, the model is not running saying rank failure.
Model diagnostics says, no obvious problem with the .mod file.
Anyone with a solution to the same problem?

Thanks

2

This indicates a problem in closing the model. How did you link the two economies?

3

Dear jpfeifer,

It’s a model without money.
In the 2 country equilibrium, home and foreign asset holdings are equal to 0. Investment above domestic saving is equal to trade balance. Foreign asset holdings next period is the sum of foreign asset holding this period multiplied by world interest rate plus trade balance this period.
I have no equation specifying ‘one price holds’, could it be an issue?

Many thanks

4

Hard to tell, but it may be the way you impose