Number of equations marked static does not equal the number of equation marked dynamics

Occbin
1

Hello,

I am currently implementing a quantitative easing model with incomplete markets in the spirit of Gertler and Karadi, embedded within a Two-Agent New Keynesian (TANK) framework. The structure of my model is inspired by Akinci’s (2020) paper, “Exchange Rate Dynamics and Monetary Spillovers with Imperfect Financial Markets.”

To enhance the consistency of my impulse response function (IRF) analysis—particularly for shocks that would imply a negative nominal interest rate in the home country (e.g., a TFP shock)—I aim to incorporate a Zero Lower Bound (ZLB) constraint using the OccBin toolkit. For this purpose, I am following the implementation found in Professor Johannes Pfeifer’s NKM.mod file.

However, upon attempting to incorporate the ZLB constraint, I encounter a preprocessing error indicating a mismatch between the number of equations in the static and dynamic systems.

I have included my code below and would greatly appreciate your guidance on how to resolve this issue. I have never encountered this issue before and despite trying to look for solutions, I can’t seem to be able to solve it. Please note that without the Occbin contraint, the steady state and the model runs well.

Thank you in advance for your support.
NKM.mod (16.1 KB)
zlb_test.mod (24.1 KB)
zlb_test_noqe.mod (23.5 KB)

2

You need to use consistent name tags that allow Dynare to identify the equation pairs:

[name = 'Policy rule', bind='zlb']
r_n_h = r_n_h(-1)^gamma_r;
[name = 'Policy rule', relax='zlb']
r_n_h = r_n_h(-1)^gamma_r*(pi_c_h(-1)^gamma_pi/beta_h)^(1-gamma_r);

zlb_test_noqe.mod (23.5 KB)