Hi, All I have a question regarding the GMM estimation. When I run the mod file, I get a message as follows. [Screenshot 2023-07-02 at 12.39.35 AM] I don’t understand how the violation of the BK condition occurs. My model is an NK model of a small open economy with tradable and non-tradable good…

By default, unit roots are counted as unstable roots in the method moment routines. Use method_of_moments(mom_method=GMM, qz_criterium=1.000001,... to count them as stable. database.xlsx (16.3 KB) GMM_estimation.mod (3.3 KB)

Thank you, Prof. Pfeifer. That’s very helpful.

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