The rank condition ISN'T verified!

Stochastic simulations
1

Dear JpFiefer

I need your help regarding Rank condition… the error I am getting again and again is
"There are 4 eigenvalue(s) larger than 1 in modulus
for 7 forward-looking variable(s)

The rank condition ISN’T verified!

Error using print_info (line 144)
This case shouldn’t happen. Contact the authors of Dynare
Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);
Error in soepk (line 283)
info = stoch_simul(var_list_);
Error in dynare (line 180)
evalin(‘base’,fname) ; "
soepk.mod (13.2 KB)

2

What did you change in my mod-file?

3

I have made many changes to your original model. Like oil has been incorporated in the production function and government spending in the aggregate demand function.

4

Then you need to move step by step. Always only add one feature and see what breaks the mod-file

5

Hello Professor,
I am trying to run the mod file attached here and I somehow get the same error.

There are 2 eigenvalue(s) larger than 1 in modulus
for 0 forward-looking variable(s)

The rank condition ISN’T verified!

I cannot figure out whether there is something wrong with my model’s timing or there have been some important equations eliminated.
Thanks in advance
book.mod (3.3 KB)

6

Did you upload the correct file? I get a message about the number of equations not matching.

7

Ops sorry, it was a wrong file. But I tried to reduce the model’s blocks in order to make it easier to debugging. I get the same error for the reduced one as well. I think if you could help (please) in this one, I can figure out the complicated model’s
first.mod (1.5 KB)
problem.
Thanks a lot!

8

Why does your model not feature any forward-looking variables?

9

I correct the equations and the problem is solved. Thanks!
But I have encountered something strange now, the steady state that I have calculated with Matlab and the steady state that Dynare calculates differs in value. Isn’t it odd? Why such mismatches happen?

first.mod (1.6 KB)
Thanks indeed.

10

See e.g. Indeterminacy problem - #4 by jpfeifer

You should put resid before steady to see that some equations have really large residuals.

11

I see, Thank you very much.