I use Dynare 4.3.2. Here is what the program tells me.

There are 8 eigenvalue(s) larger than 1 in modulus

for 8 forward-looking variable(s)

The rank conditions ISN’T verified!

??? Error using ==> print_info at 46

Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure

I’m curious to know what is wrong in the model. I hope someone could help me.

Thank you!

Basetaxram_newmodel.mod (2.35 KB)

Run model_diagnostics. There are two issues here:

[quote]MODEL_DIAGNOSTICS: The following endogenous variables aren’t present at the current period in the model:

taok

MODEL_DIAGNOSTICS: The Jacobian of the static model is singular

MODEL_DIAGNOSTICS: there is 1 colinear relationships between the variables and the equations

Colinear variables:

psi

theta

miu

xsi

AUX_ENDO_LEAD_145

Colinear equations

18 22

MODEL_DIAGNOSTICS: The presence of a singularity problem typically indicates that there is one

MODEL_DIAGNOSTICS: redundant equation entered in the model block, while another non-redundant equation

MODEL_DIAGNOSTICS: is missing. The problem often derives from Walras Law.[/quote]

Thank you! However, I still don’t understand the first argument. What does it mean that “taok is not present at the current period in the model.” Would you please help me explain that?

It means that taok only shows up with a lag or lead, but never with contemporaneous timing. Looking at your code, it seem the equation

```
rtilde(-1) = (1-taok(-1))*alpha*k(-1)^(alpha-1);
```

violates Dynare’s timing convention. The equation is purely predetermined. This does not make sense.