I tried to build a small open economy model with flexible prices but no capital, which has the features of vertical production structure and External debt-elastic Interest Rate (SGU, 2003).
When I run it, it reports ‘There are 3 eigenvalue(S) larger than 1 in modulus for 2 forward-looking variable(s). The rank condition ISN’t verified!’.
By looking up relevant information, I know that it is highly likely to have timing problems, but I cannot know where the timing problems are. I uploaded my mod.
Hopingto get your helps!
Rsimul2.mod (1.8 KB)
When I change the productivity equation, and it works.
log(a) = rholog(a(-1))+e;
was converted to
log(a(+1)) = rholog(a)+e;
But I’m still confused.
You did not upload
Thank you for response.
Here are two data.
param_r.mat (234 Bytes)
end.mat (330 Bytes)
I recommend checking the timing of all state variables as well as the market clearing conditions associated with these.
I also think your model is weird, such as
l1 =(y1h + y1hstar)/a; , your model is similar to Wei and Xie(2020, JIE), you can refer to their paper.
Thank you, Jingjing. I will follow your advice.This model is partly based on their literature.
The fact that changing the timing of a correct equation (TFP) fixes the timing issue, indicates that there is a different equation with a timing problem.
Thanks so much for your guidance，jpfeifer. I’ll check the other equations