Hello,
I’m trying to run the attached code. It’s a small open economy model with 2 stochastic shocks: Technology shock and government expenditure. The model is based on the paper called “Closing Small Economies” where the interest rate is dependent on the foreign debt level. First I ran the model without government and taxes and ran perfectly.
To this model, I just added government. The debt level of the country is financed by bonds (that the government issue to the foreign countries) and by consumption taxes to the households. This is the modelo4.mod file and is not running at all. When running the code, I get this error message: "Error using print_info (line 42)
Blanchard Kahn conditions are not satisfied: no stable
equilibrium
Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);
Error in modelo4 (line 247)
info = stoch_simul(var_list_);
Error in dynare (line 180)
evalin(‘base’,fname) ;
I don’t know what is happening! can someone help me please!!!
Could anyone please help me?
Many thanks!
F.
modelo4.mod (4.59 KB)