Error in computing likelihood for initial parameter values

[Jumping]

hi,

i wanna run a small open economy model with dynare ,but i always get this kind of errors after getting steady-state results:

Error in computing likelihood for initial parameter values
??? Error using ==> print_info at 33
The model doesn't determine the current variables uniquely

Error in ==> initial_estimation_checks at 69
print_info(info, DynareOptions.noprint)

Error in ==> dynare_estimation_1 at 169
oo_ = initial_estimation_checks(objective_function,xparam1,dataset_,M_,estim_params_,options_,bayestopt_,oo_);

Error in ==> dynare_estimation at 70
dynare_estimation_1(var_list,dname);

Error in ==> zdp5 at 206
dynare_estimation(var_list_);

Error in ==> dynare at 120
evalin('base',fname) ;

i don't konw how to fix it ,i need your help ,any help will be greatly appreciated ,thx!

[jpfeifer]

You have the classical case of a non-stationary model that only determines inflation, but not the price level. Please drop the price level from your model by only using inflation and using a corresponding observation equation. See my https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf?attredirects=0 for more information

[Jumping]

You have the classical case of a non-stationary model that only determines inflation, but not the price level. Please drop the price level from your model by only using inflation and using a corresponding observation equation. See my https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf?attredirects=0 for more information

dear jpfeifer,

i change my mod file following your advice ,but another problem come out, when i use 'check',it says
EIGENVALUES:
Modulus Real Imaginary

0 0 0
0.42 0.228 0.3527
0.42 0.228 -0.3527
0.75 0.75 0
0.9 0.9 0
0.9 0.9 0
1 1 0
1.041 1.041 0
11.67 11.67 0
Inf Inf 0


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

The rank condition is verified.

Loading 71 observations from zdp5data_simu.mat

Error in computing likelihood for initial parameter values
??? Error using ==> print_info at 40
Blanchard Kahn conditions are not satisfied: no stable equilibrium

Error in ==> initial_estimation_checks at 69
print_info(info, DynareOptions.noprint)

Error in ==> dynare_estimation_1 at 169
oo_ = initial_estimation_checks(objective_function,xparam1,dataset_,M_,estim_params_,options_,bayestopt_,oo_);

Error in ==> dynare_estimation at 70
dynare_estimation_1(var_list,dname);

Error in ==> zdp5 at 207
dynare_estimation(var_list_);

Error in ==> dynare at 120
evalin('base',fname) ;

in dynare user guide ,'BK conditions are met only if the number of non-predetermined variables equals the number of eigenvalues greater than one.' and what’s more，when i use ‘model_diagnostics(M_,options_,oo_)’ ,the output is that

model_diagnostic: the Jacobian of the static model is singular
there is 1 colinear relationships between the variables and the equations
Colinear variables:
Pi_obs
Colinear equations
2 3 8 9

is the colinearity cause the problem？i am confused what to do to improve something ,could u give me some advice ,please.thx again！

[jpfeifer]

Please post the mod-file

[Jumping]

Please post the mod-file

i'm sorry .
thx a lot

[jpfeifer]

This is not a correct observation equation. If you observe inflation, you might have something like:

Code: Select all

model(linear);
...
pi=Pi_obs;
end;

[Jumping]

This is not a correct observation equation. If you observe inflation, you might have something like:

Code: Select all

model(linear);
...
pi=Pi_obs;
end;

thank u very much.your advice help me a lot