Dynare forums

I have make some adjustments to the fs2000.mod file to include a Taylor rule and I made some adjustments to the bank's balance sheet. The stochastic shock works just fine. But my Bayesian estimation causes dynare to crash. The error message is

The loglinearization of the model cannot be performed, because the steady state is not strictly
positive.

Also, dynare tells me to try adding

an empty estimated_params_init-block with use_calibration option immediately before the estimation command

. Would this work? Is there an example of what this means?

Please advise.
Thanks

Add

estimated_params_init(use_calibration);
end;

The problem is that without explicitly provided starting values, estimation will start at the prior means. But at the prior mean, the steady state of

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gap

becomes negative, giving rise to the reported error message. But given that you have a running calibrated version of the model, you can use the

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use_calibration

option.

thanks. I really appreciate all of your help.