I have been trying to simulate monetary shocks on Dynare, but getting the error “Blanchard & Kahn conditions are not satisfied: indeterminacy”, because the rank condition isn’t satisfied. I’m not sure if it’s a problem with the model or with the initial values.
PS: It’s based on Gali’s chapter 3 model, using \alpha = 1. NK.mod (976 Bytes)
Thanks in advance!
Hello, I haven’t the book handy but looking at your file, in Eq7, the rnat(+1) seems strange to me, maybe it is just rnat. Let me know if it works. Best.
Indeed, the equation mentioned by @fernando is strange, because you usually want to define
rnat, not its expected value.
See also https://github.com/JohannesPfeifer/DSGE_mod/blob/master/Gali_2015/Gali_2015_chapter_3.mod
That was it! Many thanks!