Bayesian Estimation: Blanchard Kahn conditions are not satisfied: no stable equi

Dear Professor Pfeifer

I have recently started attempting to perform Bayesian Estimation. On one of the estimation attempts I encountered the following error:

Error in computing likelihood for initial parameter values

ESTIMATION_CHECKS: There was an error in computing the likelihood for initial parameter values.
ESTIMATION_CHECKS: If this is not a problem with the setting of options (check the error message below),
ESTIMATION_CHECKS: you should try using the calibrated version of the model as starting values. To do
ESTIMATION_CHECKS: this, add an empty estimated_params_init-block with use_calibration option immediately before the estimation
ESTIMATION_CHECKS: command (and after the estimated_params-block so that it does not get overwritten):

Error using print_info (line 42)
Blanchard Kahn conditions are not satisfied: no stable equilibrium

Error in print_info (line 42)
error([‘Blanchard Kahn conditions are not satisfied: no stable’ …

Error in initial_estimation_checks (line 175)
print_info(info, DynareOptions.noprint, DynareOptions)

Error in dynare_estimation_1 (line 165)
oo_ =
initial_estimation_checks(objective_function,xparam1,dataset_,dataset_info,M_,estim_params_,options_,bayestopt_,bounds,oo_);

Error in dynare_estimation (line 105)
dynare_estimation_1(var_list,dname);

Error in FFestimation (line 343)
oo_recursive_=dynare_estimation(var_list_);

Error in dynare (line 235)
evalin(‘base’,fname) ;

I have following this error included an empty estimated_params_init(use_calibration); block yet the problem persist. What would be your suggestion for me to overcome this problem? Looking forward to hear from you.

Best regards
Azeem FFestimation.mod (4.6 KB) Consumption.csv (7.4 KB)

1 Like

Dear Professor Pfeifer

Thanks for that. I have used diffuse_filter in estimation and it works. However my problem currently is that following estimation, computation of IRFs at posterior mode/means does not work. It comes with the following error:

Error using print_info (line 42)
Blanchard Kahn conditions are not satisfied: no stable equilibrium

Error in stoch_simul (line 100)
print_info(info, options_.noprint, options_);

Error in FFestimation (line 355)
info = stoch_simul(var_list_);

Error in dynare (line 235)
evalin(‘base’,fname) ;

I am wondering what is the issue now. The calibrated model works fine but with updated values it appears some problem is there that I cannot identify. Any suggestion or comments would be much appreciated.

Best regards
Azeem Consumption.csv (7.7 KB) FFestimation.mod (4.9 KB)

From what I can see, you are matching detrended data to non-mean zero variables in the model. Thus, your observation equations are wrong.