I am trying to replicate the paper written ng Harrison (2012). I used a medium-scale model to replicate his paper. Upon performing the simulation I received the below error

There are 3 eigenvalue(s) larger than 1 in modulus

for 4 forward-looking variable(s)

The rank condition ISN’T verified!

warning: Problem in the model specification: some variables don’t appear as current. Check whether this is desired.

warning: called from

check_model at line 21 column 5

stoch_simul at line 92 column 1

driver at line 255 column 27

dynare at line 281 column 5

error: Blanchard & Kahn conditions are not satisfied: indeterminacy.

error: called from

print_info at line 32 column 5

stoch_simul at line 120 column 5

driver at line 255 column 27

dynare at line 281 column 5

model_diagnostics

error: ‘M’ undefined near line 38, column 38

error: called from

model_diagnostics at line 38 column 10

I knew that M is define in the model by Equation 2 and wondering why I am getting that error.

EAPBSP.mod (3.5 KB)

Thanks,

Aris