NK DSGE modified

Stochastic simulations
1

Hi,
We are experiencing issues with our NK DSGE model codes in dynare. It says we have 40 endogenous variables and 42 equations.

Also, lambda was originally listed under endogenous variables, however our lambda is precalculated by hand when finding the Euler equation, thus we believe it is NOT endogenous.

However, now we are confused if the lambda should stay exacty the same as written in Gali:
lambda = ((1-theta)(1-beta*theta))/theta)*uppercase Theta

Please see document attached

DSGE NK errors.txt (6.9 KB)

2

Check your setup. You need to link inflation and prices for example:

pi=p-p(-1)