Blanchard Kahn Indeterminancy

[jloree]

Hello All,

I have a relatively simple RBC model I am attempting to estimate, in which the only difference from the benchmark is that the share of labour in production follows a shock process. However, I am getting an error of:

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

Error in stoch_simul (line 98)
print_info(info, options_.noprint, options_);

Error in modfile1 (line 143)
info = stoch_simul(var_list_);

Error in dynare (line 180)
evalin('base',fname) ;

From what I can tell, this is usually due to time inconsistency, but I only have a few equations and it seems correct. Would appreciate any insight.

[jpfeifer]

You forgot to log the steady state of alpha when writing it as a log-process. It should be

Code: Select all

alpha=gamma*alpha(-1) + (1-gamma)*log(alphabar) + e_alpha;

not

Code: Select all

alpha=gamma*alpha(-1) + (1-gamma)*alphabar + e_alpha;


because otherwise in steady state

k^(exp(alphabar))

[jloree]

Thank you, totally solved my problem.