I am trying to solve a simple TANK model based on Bilbiie et al. (2021). Essentially the same model without the transfer/government spending part. When I try to solve it with dynare, I usually get the following message:
There are 2 eigenvalue(s) larger than 1 in modulus
for 3 forward-looking variable(s)
The rank condition ISN’T verified!
Only for the parameter combination LAMBDA=0.5 and TAUD = 0.5 (so essentially a RANK model) does it seem to work. I am new to TANK models and I can’t really find the issue. Would be super nice if anyone could help me. I attached the mod file and steady state file.
LRRTANK.mod (1.4 KB)
LRRTANK_steadystate.m (1.4 KB)
Thank you already in advance.