Hi,
I’m a bit confused on the definition of “forward looking variables” because when running my model, dynare just report

"There are 10 eigenvalue(s) larger than 1 in modulus
for 9 forward-looking variable(s)
Blanchard Kahn conditions are not satisfied: no stable equilibrium
"
To solve the problem, I need to figure out what is the forward looking variables defined by dynare.
According to message in About the rank condition
Then I understand "a forward-looking variable is a variable that appears in the model with a lead"
Yet, if I follow this definition, I find that my model have 12 forward looking variables. So I guess I misunderstand the definition. Is there anyone can help?
Besides,I have ever looked at GarciaCiccoetal2010.mod written by Johannes Pfeifer. In that mod.file, k(+1),k(+2),g(+1),d(+1),h(+1) are five forward looking variables and the model has exactly 5 eigenvalue(s) larger than 1 in modulus.

This is tricky. In general, you are right. In more complex models, some variables are substituted out (e.g. lags and leads of order>1). Moreover, when you use the predetermined_variables command, some states can look as if they are forward-looking, but they are not, because e.g. k_t+1 is predetermined.

Hi, I try to solve this problem by simplifying the model. Yet, it really confuse me when the following error is report by dynare: There are 6 eigenvalue(s) larger than 1 in modulus for 6 forward-looking variable(s)
The rank condition ISN’T verified!
Error using print_info (line 48)
Blanchard Kahn conditions are not satisfied: indeterminacy due to
rank failure
I will rather believe that 6 eigenvalue(s) larger than 1 in modulus for 6 forward-looking variable(s) means that Blanchard Kahn conditions are satisfied. Anyone here can help to explain what’s going on? If necessary, I can post my codes.
Thanks

I am having a problem related to forward-looking variables and eigenvalues. After I started the .mod file, I got a message:
"There are 13 eigenvalue(s) larger than 1 in modulus
for 14 forward-looking variable(s)

The rank condition ISN’T verified!"

By reading comments here and other parts of this forum, I understand that I have a problem with leads and lags. But, something that has to be add:

I am using an alternative .m file to calculate my steady state;

All my .mod script is a linear model;

When I comment the command “steady;” the problem is gone and I have all the results. I noticed that my impulse-response are not convergent, but I do not know if it is a problem related to the periods.

I did not post my mod file because I do not have in this moment, but someone has a guide to solve this problem and learn about the question?
Thanks in advance

My .mod and steady state are now available to you. I returned to the basic model in order to correct some mistakes that I did. The basic model is not the original, but with just one difference.
I am a little confused about these points:

the IRF are weird;

the calculated SS is ok, but the results presented in console sound weird, because some of the variables are negative.

What do you think about? Is it corrected? Could I keeping going and add other variables and equations that I would like to? SS_k.m (1.97 KB) steady_state_k.m (1.58 KB) BNDES_v12.mod (4.19 KB)

There must be something still wrong. Your model is linear, thus the steady state of the variables should be 0 as they are percentage deviations from steady state. That is not the case, because there is a constant in Equation 7. Putting resid
before steady yields

(1-nu)*R_fss*Rss*(R_f + R) + nu*R_fdss*Rss*(R_fd + R) = ((fi-1)/fi)*alpha*((P_1ss*Y_1ss)/K_1ss)*(P_1 + Y_1 - K_1(-1)); // Produtividade mrginal do capital 1

instead of

codeR_fssRss*(R_f + R) + nuR_fdssRss*(R_fdss + R) = ((fi-1)/fi)alpha((P_1ssY_1ss)/K_1ss)(P_1 + Y_1 - K_1(-1)); // Produtividade mrginal do capital 1
[/code]
However, when I corrected it, I do not have rank condition satisfied

[quote]The rank condition ISN’T verified!
Error using print_info (line 48)
Blanchard Kahn conditions are not satisfied: indeterminacy due to rank failure

Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);

Error in BNDES_v12 (line 318)
info = stoch_simul(var_list_);

Error in dynare (line 180)
evalin(‘base’,fname) ;
[/quote]

I checked the steady_state file and it is correct.
Do you have another suggestion?

Thanks again!

PS: I attached the new .mod corrected. BNDES_v12.mod (4.2 KB)

Yes, I found some differences in comparison to the article. However, the origina model is also different and still works! I am doing some tests in order to find the rank condition.

I am checking. I noticed the original code is not exactly according to the text; I use the original one in order to apply my modifications. The equations are quite similar to original code. Should I change according to the text?

Yes, you are right. The paper is Portuguese, but at the end, the author showed some of the equations he put in the code. I am thinking the code is the correct. Well, I will research more about with friends in order to find a solution! Thanks! Dissertação - Rafael Mouallem Rosa.pdf (530 KB)