Monacelli Exchange Rate and Fiscal Policy
Posted: Mon Sep 12, 2011 8:48 pmHi Dynare-People!
I am currently working on a paper by Monacelli (2006) on Fiscal Policy, the Trade Balance and the Exchange Rate. To start with I wanted to compute and simulate a simple SOE model a la Gali Monacelli in combination with Fiscal policy. The thing is, there must be some unit root in my system and the Blanchard-Kahn condition are not satisfied. I would appreciate your help very much, as I don't see anymore, where the mistake can be found.
I am currently working on a paper by Monacelli (2006) on Fiscal Policy, the Trade Balance and the Exchange Rate. To start with I wanted to compute and simulate a simple SOE model a la Gali Monacelli in combination with Fiscal policy. The thing is, there must be some unit root in my system and the Blanchard-Kahn condition are not satisfied. I would appreciate your help very much, as I don't see anymore, where the mistake can be found.