Dynare forums

Dear All,

I am trying to estimate a two country DSGE model (see attached). And I have major identification issues which I am not able to solve. Since the parameters are naturally correlated. Does this mean I have to remove them from the model? I have run the model with mode-compute=6 and 9.
Maybe the dataset is not good or detailed enough because I am working with monthly data since I have incorporated migration framework. Additionally, I still have to work on the initial values of parameters. However, focusing only on this type message meaning pairwise collinearity+parameters being collinear with respect to others, how would I solve it?
I have read all of the posts on the forum and the literature on the identification. Still, I am not sure how to solve it.
I would appreciate any feedback.

Thank you so much!

You cannot fix the steady state values outside of the model block if they depend on estimated parameters. See Remark 4 (Parameter dependence and the use of model-local variables) in Pfeifer(2013): "A Guide to Specifying Observation Equations for the Estimation of DSGE Models" https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf