Please help! Auxiliary variables


Thank you very much for your prompt reply. I tried to add auxiliary variables, but it doesn’t seem to work. Probably I’m doing something wrong but I can’t find the problem.

Basically I want to have two equations:

E_(t-1)[f(theta_t, c_t, theta_(t+1), c_(t+1), k_(t+1), n_(t+1))]=0;


E_(t-1)[g(n_t, theta_t, c_t, k_t, n_t)]=0;

and to handle this I defined z1=f(t+1) and used z1(-1)=0. Similarly for the second equation I defined z2=g(t+1) and used z2(-1)=0. But the rank condition is not verified.

Thank you!
wen.mod (1.21 KB)