Smets and Wouters (2007) in "Shocks and Frictions in US Business Cycles" said (page 7):
Three other parameters are clearly not identified: the steady-state mark-up in the labor market (), which is set at 1.5, and the curvature parameters of the Kimball aggregators in the goods and labor market (), which are both set at 10.
my question is that How to estimate the parameters of this?
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non identified parameter
by mohsen » Tue May 16, 2017 9:23 am
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Re: non identified parameter
by jpfeifer » Thu May 18, 2017 9:56 am
Sometimes it's a matter of which variables you observe (and whether they were demeaned) and sometimes the parameters are fundamentally unidentified. Why do you need to estimate those parameters?
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