Problem with mod file

[sidus87]

Hello.


I'm trying to replicate the paper by Bianchi (2012) : "Monetary/Fiscal Policy mix and Agents' Beliefs".

Unfortunately if i write down the linearised equations as they are on the paper, then i get that the Blanchard Conditions are not met (3 explosive eigenvalues and 4 forward looking variables).

The only way I manage to make the simulation begin is to lag one forward looking variable (namely R_m), but i don't think that's the way to go.

I checked the model over and over again. Maybe some expert eyes, can tell me where the problem is.


As parameter values I use the posterior mode given in the paper.

the paper is here :http://public.econ.duke.edu/~fb36/Papers_Francesco_Bianchi/BianchiIlut_Policy_Mix.pdf

Thanks in advance for any advice