Hi everyone. I’m trying to run a TANK model to assess QE policies, but I have some problems with the steady state. When I run the model, some equations have residuals different from zero, as you can see below:
Equation number 26 : 0 : 26
Equation number 27 : -0.0044324 : Omega
Equation number 28 : -0.0029219 : phi
Equation number 29 : -14.8959 : 29
Equation number 30 : 7.2305e-06 : 30
Equation number 31 : 0.0055792 : n
I know that the problem may be related with the variables in equation 29, but I’m strugling to solve. Could somebody please help me.
execute_lr2023.m (7.5 KB)
lr_2023.mod (8.6 KB)
No, you should put
steady. You will see
Equation number 9 : 12.0489 : 9
Equation number 10 : -10.2945 : 10
Equation number 11 : 0.022574 : 11
Equation number 12 : -1.2492 : 12
Those are the most problematic ones. Potentially, there is even a problem with the model equations, because the numerical solver yields big residuals in equation 29 when it tries to lower the ones in the other equations
I made some changes to the model but now I have another problem:
Error using print_info
Blanchard & Kahn conditions are not satisfied: no stable equilibrium.
lrh_2023.mod (9.1 KB)
execute_lrh2023.m (6.7 KB)
Could you please give me some light
Generally speaking, check your timing. Given that your model does feature instability, pay particular attention to the fiscal rules.
Thank you professor, with your help I managed to make the model run. The problem now is that the economy I modeled looks too unstable for any kind of shock. Could you please give me any tips on how to find the source of this instability?
lrh_2023L.mod (11.2 KB)
execute_lrh2023L.m (6.9 KB)