# Bayesian DSGE model

Hallo

I am working on an open-economy DSGE model by using Bayesian method. I have some questions that i can not answer myself

1. how to choose an initial value?
2. How we can make sure that the posterior values are acceptable?

I means that the coefficient of inflation in the Taylor’s rule, for example, should be greater than 1, then

Firstly, I assign the initial value as 1.2, the result is 1.4
Secondly, I assign the initial value as 1.4, the result is 1.5

Then how can I choose them?

The goal is to find the global posterior mode. What you describe suggests that different starting values led to different (local) modes. Please try different mode-finders and starting values and select the mode with the highest posterior density.

Dear Prof. Pfeifer

This means that I have to try the different initial values as many as possible to choose the best posterior. Is this true?

In principle, yes. Ideally, you use a global mode-finder like

Dear Pfeifer

Yes sir, In this case, when I need a stationary data?

and another question is that

I have read your paper, titled: ‘‘a guide to sepcifying observation equations for the estimation of DSGE model’’

I know that I have to match the observable variables with the theoretical model variables before estimation

However, there are some complicated models with many variables. Then do we have a general solution to match the observable variables with the theoretical model variables .

In particular, I am working on the paper, titled: ‘‘Optimal monetary policy in an operational medium-sized DSGE model’’ (onlinelibrary.wiley.com/doi/10.1 … x/abstract)

Then I read their Technical appendix as the attached file. I have difficulty to derive the measurement equation systems (Section 3.1. Difference Specification, page. 28)

I mean How to derive this measurement equation system?