Dear Prof.
I am trying to replicate the Aliya Algozhina (2016), “Monetary Policy Rule, Exchange Rate regime and Fiscal Policy in a Developing Oil economy” so as to extend the model. I have carefully incorporated the steady state equations and log-linearized equations but it does not run. The error message is as follows:
The Jacobian or the dynamic model contains Inf. For more information, use options_.debug.

Error in check (line 76)
print_info(info, 0, options);

Error in Oil (line 694)
oo_.dr.eigval = check(M_,options_,oo_);

Error in dynare (line 180)
evalin(‘base’,fname) ;Oil.mod (22.1 KB)

When I use model_diagnostics(M_,options_,oo_) it does not show the problem equations. Can you help? I am new to Dynare and DSGE modelling.

ERROR: If the model is declared linear the second derivatives must be equal to zero.
The following equations had non-zero second derivatives:
* Eq # 20
* Eq # 21
* Eq # 22

I switched to using Dynare 4.5 and corrected the errors in the three equations but now a new error has emerged with respect to the Blanchard Kahn conditions. See;

here are 7 eigenvalue(s) larger than 1 in modulus
for 8 forward-looking variable(s)

The rank condition ISN’T verified!

Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 95)
print_info(info, options_.noprint, options_);

Error in Oil (line 700)
info = stoch_simul(var_list_);

Error in dynare (line 223)
evalin(‘base’,fname) ;

I have read through earlier threat on indeterminacy due to Blanchard Kahn condition but I can’t trace which equation is generating the error. Can you help? The revised codes are attached.

Thank you for your advise. I have managed to run it by assigning predetermined capital and improving on the estimates of ratios of variable to output. However, the model can accept only one predetermined capital at a time. I know the later will not affect my extension since my two sector model has one sector which purely labour intensive.

You are right but I don’t understand why it accept predetermined capital for Non-oil sector and Government capital accumulation but does not accept a predetermined capital for the oil sector.

I will check on the Timing of Capital in two sector economy as I work on my extension which involved reworking through all the equations.