I tried to build a NK-model with foresight in fiscal and technology, and monetary policy without foresight effects (please see model detail in .mod file).
The problem now is ‘Spurious Convergence’. I checked the forum for answer, the potential reasons maybe:
(1) the government spending is not stationary, thus variables need normalization, and I am wondering in which part of .mod file can I do the normalization?
(2) the initial conditions are inapproriate, due to some of them in the .mod file are quite a algebraic disaster.
Can you have a look and give a clue at this moment? THANKS in advance !
term_papar_g.mod (5.39 KB)