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)