Dear Dynare staff,
I’m working on an extended version of the model of Gertler & Karadi (2011) with long term debt and sovereign risk. When I run the model, the stochastic simulations work perfectly, however, the deterministic one doesn’t. I need this simulation in order to get the min and max functions at work.
I found in another topic in the forum that it could be a problem of the timing because (correct me if I’m wrong) each current endogenous variable must have a corresponding equation that defines it. I found that I do have this problem in my model since I have two equations defining a unique current variable R (equations 4 and 25). When I fix the problem, I do not have the same IRFs in the stochastic simulation. How can I do to fix the problem without disturbing my model’s dynamics?
Thank you in advance for your help.
the model : model8.mod (7.9 KB)
the model with problem fixed : simul.mod (8.0 KB)