Dear all,
Here I'm attaching Dynare code for estimating Rabanal-Rameraz BSP model (2005). I'm trying to modify the model by getting rid of real wages as an observed variable, because I don't have enough data about it for the country I am gonna apply this model on (Tanzania). Is it right to skip any shock (because the model has 4 shocks and four observed variables) to balance for the new number of observed variables? or Do I have to skip a specific shock? In my attached file you will find that I'm skipping the mark-up price shock...I'm waiting for your replies.
Thanks in advance,
Walaa Mahrous.