Re: Help with RANK Condition not being satisfied
Posted: Thu Feb 04, 2016 12:43 pm
I don't know your model well enough, so you are the one who needs to figures this out based on economic intuition. In particular you need to think about the timing convention in your model.
The question which debt stock is predetermined is answered by considering when their value is determined. For example, when you buy a risk-free bond today at price R^(-1) you know that the debt stock one period later will be B=1. It does not matter that markets need to adjust at time t+1 to clear the debt market. That only means demand needs to adjust to a given supply
The question which debt stock is predetermined is answered by considering when their value is determined. For example, when you buy a risk-free bond today at price R^(-1) you know that the debt stock one period later will be B=1. It does not matter that markets need to adjust at time t+1 to clear the debt market. That only means demand needs to adjust to a given supply