Basic RBC

[blue]

Hello guys,
I'm a new user of the dynare.
I got error messages while replicating a basic RBC model.

>> dynare rbc

Configuring Dynare ...
[mex] Generalized QZ.
[mex] Sylvester equation solution.
[mex] Kronecker products.
[mex] Sparse kronecker products.
[mex] Local state space iteration (second order).
[mex] Bytecode evaluation.
[mex] k-order perturbation solver.
[mex] k-order solution simulation.
[mex] Quasi Monte-Carlo sequence (Sobol).

Starting Dynare (version 4.3.0).
Starting preprocessing of the model file ...
Found 6 equation(s).
Evaluating expressions...done
Computing static model derivatives:
- order 1
Computing dynamic model derivatives:
- order 1
- order 2
Processing outputs ...done
Preprocessing completed.
Starting MATLAB/Octave computing.


STEADY-STATE RESULTS:

y 0
c 0
k 0
n 0
lambda 0
z 0

EIGENVALUES:
Modulus Real Imaginary

0.9186 0.9186 0
0.95 0.95 0
1.1 1.1 0
Inf Inf 0
Inf Inf 0


There are 3 eigenvalue(s) larger than 1 in modulus
for 4 forward-looking variable(s)

The rank conditions ISN'T verified!

Error using print_info (line 43)
Blanchard Kahn conditions are not satisfied: indeterminacy

Error in stoch_simul (line 81)
print_info(info, options_.noprint);

Error in rbc (line 137)
info = stoch_simul(var_list_);

Error in dynare (line 120)
evalin('base',fname) ;



Thank you for replying in advance.
Best

[jpfeifer]

Please post the mod-file

[blue]

Sorry, I attached the file.

[jpfeifer]

You are violating Dynare's timing convention for predetermined variables, see the manual. Capital is a predetermined state. Either use the predetermined_variables command or shift the capital timing by one period.

[blue]

Thank you. Now the .mod file works.

However, the result shows the output and employment decreases despite the positive shock.

Why does this happen?

[jpfeifer]

Check your model and in particular if the sign of the Lagrange multiplier is correct and consistent.

[lucianita.v.a]

Hello. I am having the same issue when trying to model Tack Yun's Optimal Monetary Policy model.

There are 4 eigenvalue(s) larger than 1 in modulus
for 6 forward-looking variable(s)

The rank conditions ISN'T verified!

??? Error using ==> print_info at 42
Blanchard Kahn conditions are not satisfied: indeterminacy

I would appreciate if you could help me find the problem with my mod.
I attach the mod file.

[jpfeifer]

Look into the posted mod-file to see the timing/how the exogenous processes have to be entered.

[lucianita.v.a]

I changed the equations corresponding to the processes of the exogenous shock to

g=rho_g*g(-1)+e_g;
a=rho_a*a(-1)+e_a;

But still I get the error, now a little better i think

There are 4 eigenvalue(s) larger than 1 in modulus
for 5 forward-looking variable(s)

Anyhow, something is still wrong and I don't know which of the equations are misspecified.
If you could point out which of them may be generating the error message I would appreciate.

Thank a lot

[kyri82]

Sorry, I tried but I could not see anything. Actually, the error I am getting is that there is an eigenvalue to close to 0/0.!
In any case, make sure you typed in the model correctly and that the timing of the variables is correct. Also, be careful about the choice of your parametres. I dont know if you can give me some hints about the model I might be able to help you.

Btw, you start with the command: model(linear). Are you typing in the equations already in a log-linearised form?

K.