I’m trying to estimate Monacelli (2005), Monetary Policy in Low Pass-through Environment with a few modifications (Taylor rule). I keep getting Blanchard-Kahn indeterminacy unless I make foreign output exogenous. I’ve been struggling with this issue for days and would really appreciate it if someone could take a look and point me in the right direction. Thanks!
There are 4 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s)
The rank conditions ISN’T verified!
??? Error using ==> print_info at 42
Blanchard Kahn conditions are not satisfied: indeterminacy
Error in ==> stoch_simul at 46
Error in ==> mymodel at 226
info = stoch_simul(var_list_);
Error in ==> dynare at 132
mymodel.mod (5.23 KB)