Please I am working on a simple NK model with Rotemberg pricing (but have two AR(1) process, gov't spending and transfer payments). I log-linearized and used matlab to calculate the steady state but anytime I run the code it says B-K condition not satisfied (rank condition). I have attached the file. I will appreciate your help.
Thanks
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Indeterminacy
by nana87 » Mon Mar 23, 2015 5:31 pm
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Re: Indeterminacy
by jpfeifer » Tue Mar 24, 2015 9:14 am
Check your equations. It seems as if equations 2 and 10 might have wrong signs. Also, your timing for bonds b seems to violate the Dynare timing convention. See the manual and dozens of posts in the forum.
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