I met a problem for ‘rank condition’ when I ran my code.
The question is that when I use ‘pit=Pt/Pt(-1)’ to define the inflation rate, the rank condition isn’t verified! I tried to revise my code and I used ‘pit(+1)=Pt(+1)/Pt’ to define the inflation rate, the rank condition is verified but it could not find a linear solution.
I believe there are mistakes in my dynare code but I can not find them. Thanks for your help!
The mod file is attached. TransPath_Benchmark_debt.mod (6.6 KB)
Thank you very much, Mr. Jpfeifer.
I fixed a timing error but the rank condition was still not verified. Are there some tools that helps me find the timing error or are there some common mistakes that I can check whether they appear in my code.
Hi, Mr Jpfeifer. The bond supply is determined by the flow budget constraint of government and the bond demand is an interior solution in household’s maximization problem. I have no idea how to make sure that the bond cannot explode, but as far as I could judge, the debt cannot explode.