Dynare forums

I'm trying to do an extension of Aguiar & Gopinath's paper 'the cycle is the trend' by adding a second country, so the model contains 2 countries symmetric everywhere except the variance of their shocks.

The code shows the message "There are 9 eigenvalue(s) larger than 1 in modulus for 8 forward-looking variable(s). The rank condition ISN'T verified!" I am new to dynare and matlab in general, so I'm having trouble finding the source of the problem. Any insights would be greatly appreciated!

Hi,

the message returned by Dynare means the steady state of your model is not stable (there is a unit root). This issue
is well described in the literature about to country RBC model.

Best, Stéphane.