Dear all! I am trying to replicate a New-Keynesian DSGE model. I use equations from the Appendix of the paper, where the Taylor rule is defined by authors as follows: r_{f,t} = \rho_r r_{f, t-1} + (1-\rho_r) \left[ r_f^{ss} + \alpha_{\pi}log(\pi/\bar{\pi}) + \alpha_Ylog(Y/Y(-1) \right] , where Y …

Dear Professor, Thank you for your help. I have double-checked the file before sending it to you and the issue was with timings. Now everything works.

Dynare Forum

Single collinear equation

Stochastic simulations

jpfeifer 27 February 2024 14:53 2

See

Collinear equation Stochastic simulations

You can verify in the displayed eigenvalues that there are three unit roots in your model. The reason is you trying to endogenously compute the steady state with the steady_state-operator for things that cannot be endogenously determined. See

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