Dear all,

I tried to replace the Taylor rule that describes monetary policy in the NK_baseline model with the rule outlined in the handbook chapter on DSGE models for monetary policy analysis:

log(R_{t}/R) = \rho_{R}log(R_{t-1}/R) + (1-\rho_{R})(r_{\pi}log(\pi_{t+1}/\pi) + r_{y}log(gdp_{t}/gdp)) + \epsilon_{R,t}

where gdp_{t} = x_{t} + c_{t}.

Unfortunately, I received the following error message:

There are 14 eigenvalue(s) larger than 1 in modulus

for 15 forward-looking variable(s)

The rank condition ISNâ€™T verified!

Error using print_info (line 32)

Blanchard & Kahn conditions are not satisfied: indeterminacy.

Does anyone know the reason for the indeterminacy?

Thanks in advance!