Dear all,
I’m new to dynare and started working on simulation but unable to do the same. Can you please help me in this??
simulation.mod (409 Bytes)
Your model does not satisfy the Blanchard-Kahn conditions and is explosive. Use the attached file to see this:
simulation1.mod (425 Bytes)
Thank you so much for replying. Blanchard-Kahn conditions mean I should have two forward-looking variables for two eigenvalues greater than 1. Is that correct?? Can you please guide me here if is it possible to solve such kinds of models?? I need to determine the transition path for my endogenous variables. Is it possible to do it in matlab without using dynare?? Or is there any other way?? Please help me in this regard.
Also, La is my choice variable and lies between 0 to 1 but to find the transition path, I assumed it to be 0.25. So basically, I have two forward-looking variables La and i for two eigenvalues greater than 1, so analytically my Blanchard Kahn conditions are satisfied but I don’t know how to proceed with this in dynare.
But that means La needs to be chosen endogenous to prevent explosiveness. Your model is simply incomplete right now. If the problem is just the bounds, first try it without the bounds and then impose the bounds by using a logistic transformation.
Okay, thank you so much for all the help.