Timing/Instability in TANKSOME Model


I’m trying to code up an open economy model in the spirit of de Ferra, Mitman and Romei 2020, but in a two-agent setting rather than a heterogenous agent setting. I have Ricardian agents with access to the asset market, and Hand to Mouth agents with no access to asset markets. I am trying to code this up into dynare under two different monetary policy specifications - constant inflation and constant exchange rate. However, I keep running into BK violations / no stable equilibrium problems, which I suspect are related to timing of my variables. I have however checked and rechecked the timing on these but just can’t seem to understand what I’m doing wrong. I’d really appreciate any help!

Thank you

TANKSOME2.mod (6.0 KB)

Update on this?