Dear Professor Jpfeifer,

Thank you for your help in advance. I have a DSGE model with banking. The BK condition is satisfied but not rank condition. I use “model_diagnostics(M_,options_,oo_)” which shows that there are redundant equations, but about the equations, dynare just points at the processes I have in the model like government expenditure (AR(1)) or the similar equations. I was wondering if you can help me find the problem. the files are attached in zip file.

Sincerely,

LeoDynare.zip (8.1 KB)

My hunch is that you have the problem mentioned at An infinity of steady states with Taylor rules when you use the `steady_state`

to pin down the steady states of your exogenous process.

Dear Professor Jpfeifer,

Thank you for the hint. I corrected the model as you explained in the link. Unfortunately the error still runs. I also read Cochrane(2011) on Determinacy and Identification with Taylor Rules and got the idea and I guess the Taylor rule in my code can generate just one steady state. I matched each equation with each variable and it seems there is an identical equation for each variable. I am a little confuse. Thank you for you time and consideration.

(the new file is attached)Dynare.zip (7.6 KB)

Sincerely,

Leo

Did you provide the correct last version? I get the error

Starting Dynare (version 4.5.1).

Starting preprocessing of the model file …

ERROR: Oil_h_2.mod: line 170, cols 32-36: Unknown symbol: D_bar

ERROR: Oil_h_2.mod: line 170, cols 58-62: Unknown symbol: B_bar

ERROR: Oil_h_2.mod: line 170, cols 92-96: Unknown symbol: L_bar

ERROR: Oil_h_2.mod: line 175, cols 28-32: Unknown symbol: D_bar

ERROR: Oil_h_2.mod: line 176, cols 26-30: Unknown symbol: B_bar

ERROR: Oil_h_2.mod: line 177, cols 40-44: Unknown symbol: L_bar

ERROR: Oil_h_2.mod: line 182, cols 22-30: Unknown symbol: P_oil_bar

ERROR: Oil_h_2.mod: line 208, cols 16-20: Unknown symbol: G_bar

ERROR: Oil_h_2.mod: line 216, cols 28-35: Unknown symbol: R_CB_bar

ERROR: Oil_h_2.mod: line 216, cols 53-58: Unknown symbol: pi_bar

ERROR: Oil_h_2.mod: line 216, cols 80-86: Unknown symbol: GDP_bar

ERROR: Oil_h_2.mod: line 249, cols 10-16: Unknown symbol: R_D_bar

ERROR: Oil_h_2.mod: line 250, cols 10-17: Unknown symbol: R_IB_bar

ERROR: Oil_h_2.mod: line 251, cols 10-17: Unknown symbol: r_IB_bar

ERROR: Oil_h_2.mod: line 252, cols 10-17: Unknown symbol: r_CB_bar

ERROR: Oil_h_2.mod: line 253, cols 10-17: Unknown symbol: r_CB_bar

ERROR: Oil_h_2.mod: line 254, cols 13-17: Unknown symbol: R_bar

ERROR: Oil_h_2.mod: line 255, cols 10-17: Unknown symbol: r_CB_bar

ERROR: Oil_h_2.mod: line 257, cols 46-51: Unknown symbol: OR_bar

Opps, I’m really sorry. Please find the last version here, it should work

Dynare.zip (7.6 KB)

Dear professor,

Fortunately under your hint, I found the problem and now the model works. But I have a technical problem. When I cancel out one equation and then add market clearing, the impulse response changes. I guess it should not happened, and tresults for both case should be the same. What is this different pointing on?

I appreciate your time and consideration.

Sincerely,

Leo