# Other Taylor rule in NK\_baseline model

**URL:** <https://forum.dynare.org/t/other-taylor-rule-in-nk-baseline-model/24782>\
**Category:** Stochastic simulations\
**Created:** [18 December 2023 23:41 UTC](https://forum.dynare.org/t/other-taylor-rule-in-nk-baseline-model/24782 "2023-12-18T23:41:59Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![mat1339](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/f9ae1b/32.png) [@mat1339](https://forum.dynare.org/u/mat1339)\
**Post date:** [18 December 2023 23:41 UTC](https://forum.dynare.org/t/other-taylor-rule-in-nk-baseline-model/24782/1 "2023-12-18T23:41:59Z")

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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 ISN’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!

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [19 December 2023 11:59 UTC](https://forum.dynare.org/t/other-taylor-rule-in-nk-baseline-model/24782/2 "2023-12-19T11:59:42Z")

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Have you tried a different parameterization of the rule? Maybe you chose parameters inside the indeterminacy region.