I have a model where I suppose that the government function is exogenous, like:
log(G)=(1-rhog)(log(omega)+log(Ys)) + rhoglog(G(-1)) + eg;
(Ys stands for the steady state of Y).
I have also the equation:
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
Error in ==> stoch_simul at 81
Error in ==> BGCapitalexoCalvoG at 307
info = stoch_simul(var_list_);
Error in ==> dynare at 120
Does anyone know what is the problem here?
Thanks for your help.