Lagged expectation


I am trying to solve the basic ‘PBar’ model (McCallum (1994)) with 3 equations. There is a one-period lagged expectation of one endogenous variable, and I am using the EXPECTATION(-1)(z) command for that. However, I get an error for the Blanchard Kahn conditions, and it says I have two eigenvalues greater than 1 for two forward looking variables.

Please can I get some direction as to what I should be doing?

Thank you very much.

pbar2.mod (582 Bytes)

Please provide more information on the reference. Which paper and which equations/model?