I tried adding an ingredient department to the NK model, company1 in the mod. Extvalue (s) LARGER than 1 in modulus
for 10 forward-looking variable(s)
The rank condition ISN’T verified!
The model residual is zero. When I deleted the raw material section, the model worked. Is there something wrong with the time in my model? I have tried many times to modify the time of capital, but the problem has not been solved.
ceshi1.mod (2.8 KB)
You need to provide more context. You wrote
but never told us where that part is in your code. As is, your model implies instability. So consider what may cause variables to explode when you add raw materials. Also, if the model works with your capital timing without that part, then the timing of capital should be correct and the problem is with the newly added part.
In my model, producers use labor, capital, and fossil energy to produce products. Fossil energy producers use capital and fossil raw materials to produce fossil energy. The price of fossil materials is given externally. The model residual is zero, but it still reminded me: The rank condition ISN’t verified!
Then you need to think hard about why that part may cause instability. Note that the residuals are meaningless in this case as it is about the dynamics.