Search and matching model: timing issue

[Fabian1]

Dear Dynareist!

I build a search and matching model with borrowing constraint. However, I have to make n = n1(+1) + n2(+1) to have the MOD running. This equation is incorrect.

If I use n = n1 + n2, I got Blanchard & Kahn conditions violation due to indeterminacy caused by rank failure. I have tried to make all the search-and-matching related variables one period backwards, but the error is persistent.

I have attached MOD file, please any advice is appreciated!
SLW.mod (7.3 KB)

[jpfeifer]

This looks like a sectoral issue. See e.g.

Timing of capital in two sector economy

Hello all, I am building a two-sectoral model, and I have a question about the timing of sectoral-capital variables: In my model, T and N are sectors, hence kT is capital in sector T and kN is capital in sector N. Then, I assume that the economy’s aggregate capital is simply: k = kT + kN. However, I assume only one law of motion for aggregate capital such that: k = (1-delta)*k(-1) + i - written in Dynare language. It is clear to me that k is a predetermined variable and should be treated as su…

[Fabian1]

Thank you Prof.jpfeifer! Problem solved.