Dear all,

I want to estimate a gap-model in levels with a stochastic trend that includes a constant in the drift, particularly:

```
% trend
mmu = mmu(-1) + bbeta(-1) + e_lev;
% drift
bbeta = rrho*bbeta(-1) + (1-rrho)*bbeta_const + e_slp;
% cycle
car = pphi1*car(-1) + pphi2*car(-2) + e_cyc;
% measurement
ym1 = mmu(-1) + car(-1) + e_irr;
trend = mmu(-1);
cycle = car(-1);
```

Note that I have no problem with the version where the drift is a random walk without a drift, i.e., rrho=1. However, I want to have more control over the trend growth rate and thus work with the version where 0<=rrho<1. I have this version in Eviews up and running. But I could not get Dynare run it. I use diffuse_filter option and tried steady(nocheck) with various initial values but Dynare spits errors about computing the initial likelihood and/or steady states.

The code attached.

gap_model.zip (88.4 KB)