Dear all

I am estimating a standard RE model

model(linear);

x(1) = a11*x + a12*y(-1) + a13*eps;
y = a21*x + a22

*y(-1) + a23*eta;

end;

I specify priors in the for of (for example)

a11,a110,a11min,a11max,NORMAL_PDF,mean,sd;

where a110, as I understand, is used to compute initial likelihood. Suppose the Blanchard-Kahn conditions are satisfied for a110 (and other initial values). Does this imply that posterior distributions are such that the Blanchard-Kahn conditions are satisfied? When the dynare takes a random draw of aij coefficients and finds that BK conditions are NOT satisfied, what does it do? Since it never crashes I suspect it assumes the likelihood is minus (or plus) large number and ignores this combination. Am I right?

Tanya