dear all,
Computing my code, I get some eigenvalues with infinite modulus.
Even though the Blanchard-Khan rank is verified, I´like to know if these infinitve outcomes guarantue or not the stability of the steady state.
If anyone of you knows as to interpret these resulst, that would be even better for me.
I´d really appreciatte your help.
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Re: Eigenvalues
by jpfeifer » Fri Sep 07, 2012 6:26 am
You are confusing quite a lot of things in your question. Your question refers to the BK conditions, not the rank condition. As Dynare uses the generalized QZ decomposition, Infinite eigenvalues are just treated as finite ones. Their modulus is larger than one, thus counting towards the unstable roots. If the BK conditions are satisfied (Dynare will tell you), you have a unique and stable solution (i.e. saddlepath). It is not really about stability of the steady state.
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