- Code: Select all
close all;
//define variable
var pi, x, i, e, u, v;
varexo epsilon, mu, eta;
parameters beta, kappa, sigma, p, w, sigmae, sigmamu, sigmaeta;
//give parameters value
beta =0.99;
w=0.5;
kappa=((1-w)(1-w*beta))/w;
sigma=1;
p=0.975; // choice by yourself, p<1
sigmae=1;
sigmamu=1;
sigmaeta=1;
model(linear);
pi=beta*pi(+1)+kappa*x + e;
x=x(+1)-(1/sigma)*(i-pi(+1))+u;
i=(p * i(-1))+v;
e=p * e(-1) +epsilon;
u=p * u(-1) +mu;
v=p * v(-1) +eta;
end;
//inital value
initval;
pi=0;
x=0;
i=0;
e=0;
u=0;
v=0;
epsilon=0;
mu=0;
eta=0;
end;
shocks;
var epsilon=sigmae^2;
var mu=sigmamu^2;
var eta=sigmaeta^2;
end;
steady;
//run
stoch_simul;
We try to try reduced new keynesian model. but the there is problem shows "there are 1 eigenvalues larger than 1 in modulus,
the rank condition isn't verified.
can someone help me with this? please.