Rank condition not verified, but all variables seem to converge

I’m trying to replicate the model in Hansen2020. The linearized version of the model runs just fine, however, in the unlinearized version, the rank condition is not verified. The confusing thing now is, that I still get results and all my forward looking variables seem to converge to the steady state.

  1. Is there any case, where it makes sense, that the rank condition is not verified for the nonlinear model, when it is for the linear model?

  2. What does it mean, that the rank condition is not verified, when all my variables converge to the steady state? Does it mean, there are multiple solutions and Dynare just picked one?

Hansen2020_Copy.mod (2.4 KB)
Hansen2020_NotLinearized_Copy.mod (2.8 KB)
Hansen2020_NotLinearized_steadystate_helper.m (411 Bytes)

This typically is caused by a timing error. The two models should coincide in the BK conditions.
Yes, Dynare most likely picked on possible solution.

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