Taylor rule problem in 2 agents model_nonlinear

[Dean]

Dear @jpfeifer, thank you! Might it be related to government spending and fiscal rules?
As is it here:

Baseline DSGE + government

I am not sure I understand @punnoosejacob’s answer. Conceptually, an model economy does not need to be saddle path stable or have a non-stationarity. So even a small open economy does not have to be closed. That being said, we usually think that saddle path stable equilibria are the ones that interest us. In that case, there is a transversality+No-Ponzi condition that rules out explosive paths for debt. From that point of view, the models needs to include a condition that assures that debt does…

I tried to work it out with different rules and shut down shocks but still have this issue.
Should I assume government debt (B) to be 0 at steady state? If so, I cannot use taylor type fiscal rules. Could you please suggested any other type of fiscal rules? I run out of ideas :((

STEADY-STATE RESULTS when I use wrong Taylor rule for monetary policy.

Y 1.50429
C 1.05625
CR 1.05625
CNR 1.05625
B 36.6369
B_R 73.2739

B and B_R seem very high.