TANK model equations

Hi everyone,

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.

You may wanna watch this video, they show how to know which parameter combinations (in the parameter space) will violate or not violate BK conditions using dynare.


Given that it works for a particular special parameterization, I would expect it to be something systematic in the setup, not jut a parameter issue.