Dealing with composite parameters during estimation

  1. If something is an independent parameter, define it as a parameter. If something is a function of other paramters, use model-local variables
  2. Every term used within the model block must be defined as either a variable or parameter or model-local variable. alpha2 is used within the block, but it has not been defined as a parameter.
  3. As discussed at [Dynare Estimation: help) the Gali/Monacelli model has unit roots in its basic form and requires the use of the diffuse_filteroption
  4. If you read my Guide, you should know that you are not supposed to use a two-sided HP_filter.