Hi everyone!

I’m new to Dynare and I have a question regarding the Galì & Monacelli (2008) model on currency union. I saw an old post on the topic, but my issue seems a bit different.

I’m having trouble satisfying the Blanchard Kahn rank condition. I’m wondering if it’s a problem of unit root in the model. Since the model is based on the assumption of complete markets, it should not be the case (I think). I’m not interested in optimal policy. For now on, I’m just trying to run the model so I can add some new equations in it.

Is there a way to troubleshoot my mistake?

I attached a PDF with the equations and my .mod file.

Thanks a lot for your time,

Raphaël

g_m_2008_V1.mod (1.7 KB)

g_m_2008.pdf (371.2 KB)