Timing Problem - Blanchard-Kahn conditions

Dear all,

As already experienced by many others in this forum, I am also getting the error message that the Blanchard-Kahn conditions are violated and hence there’s no stable equilibrium. I really payed attention to the timing of the predetermined variables. I have also tried different versions of the model but the problem still persists which makes me think that I might be missing something (or there’s a more fundamental problem).

The model I am working with is very simple. There are two households, routine and non-routine. Both of them supply labour to the final good firm and non-routine households invest into automation (i.e. robots) which is used by the firm to produce Y_t. The accumulation of this process is equivalent to the one of capital. The interesting part is that robots and routine labour are substitutes in the production function of the final good firm. I was thinking that the timing problem might result from the two households or the production function.

The model diagnostics command didn’t show any other problems. I have attached all relevant files and I would be more than grateful for any tip or hint regarding the problem. Many thanks!

Quick update, I found the problem. Removing bonds from non-routine households and leaving them with a static maximisation problem solved the issue. Nevertheless, thanks!


Congratulations. I ran into similar problem. But I could not find a solution. How did you solve the problem, can you tell? Is it possible for you to share codes?

I can only guess what I did back then. I think I removed bonds completely from one household, as this produced a timing error. If you just have one predetermined variable in your model then things should hopefully be quick to debug.

okay, thanks

How did you solve the problem, can you tell? Is it possible for you to share codes? Especially the household sector

As I said above, I removed bonds completely from one household.