The rank condition ISN'T verified!/ problems finding the steady state

[digotoneto]

Dear Dynare users, I am trying to replicate the Aoki, Benigno, Kiyotaky (2015) model, which adapts the Gertler and Karadi (2011) financial sector in an open economy context. After having many problems finding the steady-state with dynare, I solve the static model using matlab fsolve, picking out some variables that were making it harder to find a consistent solution and fixing them at their SS value from the paper.

Anyway, after doing that and setting the dynare solver to fsolve (solve_algo = 0) once the default algorithm was not finding the SS, I am still having problems with the eigenvalues and the blanchard-kahn conditions.

Here is my filedigoteste.mod (4.7 KB) , if anyone could take a look and give me any piece of advice I will be extremely grateful.

Many Thanks!!

[digotoneto]

I’ve uploaded the wrong file, please consider this one!

digoteste.mod (4.7 KB)

[jpfeifer]

I would guess it is related to

Timing of capital in two sector economy

Hello all, I am building a two-sectoral model, and I have a question about the timing of sectoral-capital variables: In my model, T and N are sectors, hence kT is capital in sector T and kN is capital in sector N. Then, I assume that the economy’s aggregate capital is simply: k = kT + kN. However, I assume only one law of motion for aggregate capital such that: k = (1-delta)*k(-1) + i - written in Dynare language. It is clear to me that k is a predetermined variable and should be treated as su…

[digotoneto]

thank you very much for your answer, Johannes! Unfortunately it didn´t work as well, I still got 9 eigenvalues larger than 1 for 8 forward-looking variables, and could not find any other potential timing inconsistency problem!