The rank condition isn't verified! RBC


When trying to run this RBC model with capital and portfolio definition costs, with two equations that follow an AR(1) process (at and nt), I obtain the following set of warnings:

Error using print_info
Blanchard & Kahn conditions are not satisfied: indeterminacy.
Error in stoch_simul (line 120)
print_info(info, options_.noprint, options_);
Error in avancepreg3.driver (line 269)
[info, oo_, options_, M_] = stoch_simul(M_, options_, oo_, var_list_);
Error in dynare (line 278)
evalin(‘base’,[fname ‘.driver’]);

Thanks in advance
avancepreg3.mod (5.7 KB)

Check your timing for capital. Having k(+2) is very unusual.

Thank you professor. It solved the problem.