I added capital utilization to a previously working model and now I get the following error:
There are 8 eigenvalue(s) larger than 1 in modulus
for 9 forward-looking variable(s)
The rank conditions ISN’T verified!
What can I do about it? I attached the mod-file.
Thanks in advance for your help!
taxshocks.mod (3.32 KB)
This happens mostly because of timing mistakes,
should check the timing of interest rate, capital and utilization rate first.
Thank you very much for your reply.
I found the problem: The impact of capital utilization on the depreciation rate in the investment definition was missing. It seems to work now.
Am also experiencing the same error. I’ve gone through the mode again and again with no success.
What could be the problem with my attached code?
Thanks in advance.
CC4.mod (5.45 KB)