hi to all,i’m new to dsge as well as dynare and i’m now encounter a problem ,the results shows There are 19 eigenvalue(s) larger than 1 in modulus for 19 forward-looking variable(s) but The rank condition ISN’T verified! i wonder how to modify mod file.please help!rho2698nopi.mod (8.6 KB)
As model_diagnostics says
MODEL_DIAGNOSTICS: The following endogenous variables aren’t present at the current period in the model:
vA
vepsilonMP
You need to correct the timing of your model.
gracias！prof jpfeifer. one more question,how to declare predetermined variables? i find it very confusing.according to your previous reply to someone else, each (-1) endogenous varible appearing in the model is predetermined, can i take it as predetermined variables are those endogenous varibles with (-1)? or are there other predetermined variables besides (-1)endogenous variables? those variables appear in the model as A=rho*A(-1)+e, are they predetermined variables?
Anything that has a timing (-1) (or further into the past) is a predetermined variable. That is how Dynare detects they are a state. That implies it is your responsibility to assign the correct timing to predetermined state variables (unless you use the predetermined_variables command, see the manual).
Regarding your last question, A is an endogenous variable (e is the exogenous one). So A(-1) is a state variable. That is the reason why for the Blanchard-Kahn conditions, rho needs to be smaller than 1 in absolute value.
Thanks again Prof. jpfeifer!Here comes another problem.Because I’m not quite sure about which variable is predetermined variable, I tried several ways. When I decalred different predetermined variables(the numbers of predetermined variables are the same), Dynare gives out different results, is that normal? I mean some of the variables i declared are defintely not predetermined, but why dynare sitll gives out results?
Dynare’s counting may differ from yours due to the introduction of auxiliary variables for lags bigger than 1. Regardless, you should focus on the economics. There is one unique correct timing that you need to find. Usually, the issue involves variables like the capital stock, bonds, or net worth.
thx prof jpfeifer. but again i’m so frustrated about the predetermined variables. i just cann’t follow the rule to distinguish the predetrmined variables. in my model there’re 50endogenous variables,when i declare predtermined variables, dynare told me that there’re xx eigenvalue(s) larger than 1 in modulus for xx forward-looking variable(s),when i gave different predetermined variable ,the number of forward-looking variable(s) changed. shouldn’t there be a fixed number of forward-looking variable(s)? my model are basically based on verona(2013)and Funke (2015),would you please help figure out which one are predetermined ?
can inflation rate,investment,real wages,leverage ratio ,consumption, capital, net worth, liability ,net worth of bank ,entrepreneurs confidene new.mod (8.4 KB)
be predetermined?