Hello,

I have a model where I suppose that the government function is exogenous, like:

log(G)=(1-rhog)*(log(omega)+log(Ys)) + rhog*log(G(-1)) + eg;

(Ys stands for the steady state of Y).

I have also the equation:

C+I+G=Y

And into my model I have underline that:

G = B - (1+i(-1))*B(-1);

(That’s why I can have the first equation!)

In dynare, if I don’t declare B, this last equation doesn’t exits and everything works. The problem rises when I want to know what happend with the bonds, and I add the budget constraint. Dynare shows:

??? Error using ==> print_info at 40

Blanchard Kahn conditions are not satisfied: no stable

equilibrium

Error in ==> stoch_simul at 81

print_info(info, options_.noprint);

Error in ==> BGCapitalexoCalvoG at 307

info = stoch_simul(var_list_);

Error in ==> dynare at 120

evalin(‘base’,fname) ;

Does anyone know what is the problem here?

Thanks for your help.

Best Regards,

Veronica