Indeterminacy in a two-sector model with news shocks

Dear all,

I am trying to run a two-sector model (commodities, sector 1, and non-commodities, sector 2) with financially-included households (f) and non-financially included (i.e. hand to mouth) households (nf). The model features hedging in commodity prices, and 1-period news shocks for all the shocks in the economy. This is a generalized version of Dreschel and Tenreyro (2018).

At the moment of simulating the model in Dynare, I get indeterminancy (i.e. Blanchard and Kahn condtitions are not satisfied). Model diagnostics does not identify the problem. I adjusted the timing, turned off different channels (hedging, news shocks, different shocks), and played with different paramters (specially those of the AR processes related to each shock) and nothing works. The only reason I can think of is that there is multiple equilibrium that is achievable with the slightest perturbation, but I still believe it is unlikely given the nature of the model.

I would appreciate it if anyone could take a quick look and give me some help in trying to find out what am I missing here (I attach the .mod file below).

Thanks a lot.

news_shocks_2022_levels.mod (5.0 KB)

I can only recommend starting with a simpler version of the model. Maybe there is a timing issue with the many different capital stocks.

Thanks a lot for your reply. I will try going block by block and see what happens.