Dynare forums

I tried lots of ways to run my code, changed the parameter and fixed the equations. but it still doesn't work.
"There are 3 eigenvalue(s) larger than 1 in modulus
for 4 forward-looking variable(s)

The rank condition ISN'T verified!

Error using print_info (line 45)
Blanchard Kahn conditions are not satisfied: indeterminacy"

Here is my code.

Code: Select all

var x pi Ex Epi i u Epi_h Ex_h pi_h x_h;
 
varexo epsilon;
 
parameters beta kappa sigma rhou phipi phix alpha;
 
beta=0.99;
kappa=0.13;
sigma=1;
rhou=0.5;
phipi=1.5;
phix=0.5;
phix_h=0.5;
phipi_h=1.5;
alpha=0.9;
 
model(linear);
x=alpha*(Ex-(1/sigma)*(i-Epi))+(1-alpha)*x_h;
pi=beta*Epi+kappa*x;
x_h=Ex_h-(1/sigma)*(i-Epi_h)+u;       %housing demand
pi_h=beta*Epi_h+kappa*x_h;           %Housing price inflation
i=phipi*pi+phix*x;
Ex=x(+1);
Epi= pi(+1); 
Ex_h=x_h(+1);                       %expectation of housing demand
Epi_h=pi_h(+1);                     %expectation of housing price inflation
u=rhou*u(-1)-epsilon;               %negative shock
end;
 
shocks;
var epsilon;
stderr 1;
end;
 
steady; 
check;
stoch_stimul；


I really appreciate that if someone can help me!!!

Without knowing the model, it is impossible to tell. You need to find out what in your model structure prevents a unique determinate equilibrium. It seems you have added a second sector to an otherwise standard NK model. Try starting with a standard NK model and set the second sector to a very small size that should not affect the model dynamics. If it does not work then, there must be a fundamental problem somewhere. Then, if that works, try increasing the size/weight of that sector.

jpfeifer wrote:Without knowing the model, it is impossible to tell. You need to find out what in your model structure prevents a unique determinate equilibrium. It seems you have added a second sector to an otherwise standard NK model. Try starting with a standard NK model and set the second sector to a very small size that should not affect the model dynamics. If it does not work then, there must be a fundamental problem somewhere. Then, if that works, try increasing the size/weight of that sector.

Thx a lot, J. I already tried the first sector NK model-standard NK model, it works well. I am trying now like you said. Still stucking in them...