I am working on a model with two types of agents, one is borrowing via loans, and another is saving via deposits. There are 23 endogenous and 1 exogenous variable. Running the attached Dynare code, I face two issues:
- Negative steady-state values for variables that cannot be negative, e.g., consumption. There are also weird steady-state values for other variables.
Is this because of the wrong values of calibrated parameters or initial values, or maybe the derivations are not entirely correct?
- More importantly, even though I get the equal number for eigenvalues larger than one and forward-looking variable(s), I still get the following error: The rank condition ISN’T verified!.
I guess the problem of the rank condition must be related to the timing. I have modified the timing of loans and deposits or their related interest rates in different settings; however, I get the same error every time. Is there any other way to fix this problem?
I have attached the mod file and a pdf file to clarify the variables and equations.
I really appreciate any help you can provide.
Newcode.mod (6.1 KB)
NewQuestion.pdf (128.9 KB)