dear Michael,

many thanks again for all your help in prompt replies to our queries.

On the question of rank condition which I presume follows the Blanchard and Kahn solution conditions.

We run two tests, the first being with one endogenous backward looking variable; and the statement we get is:

"There are 0 eigenvalue(s) larger than 1 in modulus for 1 forward-looking variable(s). The rank condition is verified."

The first question is: why does it tell us that it is a forward looking ( we indeed get an eignevalue less than 1).

Secondly, running the same simulation with five endogenous, of which 1 forward looking and 4 backward-looking and we get the following statement:

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

for 4 forward-looking variable(s). The rank conditions ISN'T verified!"

a) why not just 1 forward looking variable ?

b) we also get two infinite eigenvalues. How's that possible ?

c) depending on the system we work with, we get sometimes a different number of eigenvalues (fewer or more) than there are declared endogenous variables;

d) is there an order in which we have to enter the equations or variables so that dynare knows which are backward or forward looking variables ?

We'ld be grateful if you could give us a hint on what it means.

P.S. We've attached two files:

a) flexp4.mod regards the 1st question (it includes a stoch_simul which we had included as a test. But the rank conditions we get with just simul are the same. That is the part that is intriguing us).

b) flexp.mod regards the 2nd question.

with best regards,

martom