Indeterminacy when Replicating Krause & Lubik Code

Hi there,

I tried to replicate the Krause and Lubik Code of the (Ir)- relevance of real wage rigidity in in the NKM with search frictions. When I run the code I have indeterminacy problems. Dynare’s error message is:

??? Error using ==> print_info at 24
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in ==> stoch_simul at 50

Error in ==> KrauseLubik at 139

Error in ==> dynare at 26
evalin(‘base’,fname) ;

I attached the mod file. I don’t know how to get further on. Please help me.

Thanks a lot.

KrauseLubik.mod (4.36 KB)

Hi Björn,

Your mod file is not working. First you cannot use the symbol % to comment out a line with a dynare statement in the mod file. Use // instead. Second, there is a problem on line 31. I think that, with dynare 4, you cannot use the symbol @ in a dynare statement (you can call the quad function and update the value of the parameter Hauc in the steady state file). I tried with dynare 3 but the function afa is missing.

Best, Stéphane.

Hi Stephan,

I use the version 3 of Dynare and the symbol @ works well. I have another code which works with this function. I attach the afa file, so that you can run the code.

Thank you.


afa.m (121 Bytes)


I don’t know this model and I don’t have time to search and read the paper by Krause and Lubik… You have eight jumping variables but only seven generalized eigenvalues greater that one. The problem may be related to an error in the timing of the variables. A predetermined variable X at time t have to be written X(-1) in dynare (this variable is choosen in t-1).

If I change , in the production function, n (employment??) by n(-1), dynare solves the model without trouble… But, again, I don’t know this model…

Best, Stéphane.


I am interested in replicating this model. I just would like to ask you, is it not supposed to be freely available a code when the work is published? I am interested in this code for replication, but I haven’t found any source yet.


If you are interested in replication this might be of interest to you: ReplicationWiki