Rank condition and an intuitive question

[leonard007]

Dear Professor jpfeifer,
I have a .mod file which works perfectly. Recently I found a timing problem in my model about interest rates (r "interest on deposit" and r_b "interest on loan"). Intuitively, both of these interests are formed when deposit or loans are raised (at t). For instance, depositors receive

Code: Select all

(1+r(-1))d(-1)

at time t. Unfortunately, Now I have a rank condition (16 to 14). when I push forward the interests, the program works that is normal, but intuitively, it is not correct (I guess). I was wondering of you could help me find and solve the problem?
I put the codes in the attached zip file.
Sincerely,
Leo

[jpfeifer]

That is hard to tell. You are the model builder who set up the model the way it currently is. What you describe suggests a timing error in your model. It might be somewhere you do not expect it and the "mistake" in the timing of the interest rate "fixes" the original problem by making the model solution unique and bounded, but at the cost of being economically insensible.