Monacelli Exchange Rate and Fiscal Policy

Hi Dynare-People!

I am currently working on a paper by Monacelli (2006) on Fiscal Policy, the Trade Balance and the Exchange Rate. To start with I wanted to compute and simulate a simple SOE model a la Gali Monacelli in combination with Fiscal policy. The thing is, there must be some unit root in my system and the Blanchard-Kahn condition are not satisfied. I would appreciate your help very much, as I don’t see anymore, where the mistake can be found.
Master.pdf (229 KB)
monacelli.pdf (491 KB)
simple.mod (3.88 KB)

I figured it out. There were some redundant equations and the effective rer has to be taken in 1st differences.

I post the models for you, in case you are interested in its simulation.

simple.mod (3.62 KB)