# Search and matching, capital adjustment cost and timing issue

**URL:** <https://forum.dynare.org/t/search-and-matching-capital-adjustment-cost-and-timing-issue/27334>\
**Category:** Stochastic simulations\
**Created:** [18 March 2025 18:51 UTC](https://forum.dynare.org/t/search-and-matching-capital-adjustment-cost-and-timing-issue/27334 "2025-03-18T18:51:04Z")\
**Posts on this page:** 2\
**Page:** 1

<div class="post-metadata">

**Author:** ![Fabian1](https://forum.dynare.org/letter_avatar_proxy/v4/letter/f/eada6e/32.png) [@Fabian1](https://forum.dynare.org/u/Fabian1)\
**Post date:** [18 March 2025 18:51 UTC](https://forum.dynare.org/t/search-and-matching-capital-adjustment-cost-and-timing-issue/27334/1 "2025-03-18T18:51:04Z")

</div>

Hi Dynareist!,

I build a search and matching framework with borrowing constraint and heterogenous households. I added capital adjustment cost (on Eq.9 and 11). If I assume the CAC=0, the MOD file runs fine, but if I increase the cost, indeterminacy issue shown up. This might be caused by incorrect timing associated with capital?

The predetermined variables are n, n1, n2, k. There is a k\_{t+2} involved in the model block due to the adjustment cost. I tried to not making k to be predetermined, and using k\_{t} and k\_{t-1} instead, however the error persists.

Please any help regarding this is appreciated!  
[SLWv4.mod](https://forum.dynare.org/uploads/short-url/9MAc9c3bKmkoFkHgbDqCr3HwNlp.mod) (7.4 KB)

---

<div class="post-metadata">

**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [23 March 2025 20:24 UTC](https://forum.dynare.org/t/search-and-matching-capital-adjustment-cost-and-timing-issue/27334/2 "2025-03-23T20:24:56Z")

</div>

That is hard to tell. Does the strength of adjustment costs matter?