Well, one of the reasons I chose this model was that the foreign economy is modelled explicit.

Anyway, I’m probably going to drop the irf analysis and focus on estimation of parameters, VD and optimal policy. What I want to do is to find the optimal monetary policy weights in this estimated model with different weights on the taylor rule: inflation, output, output growth and past inflation(t-1).

So my questions are if it’s possible to use the estimation values directly in the optimal policy? Should I enter the taylor rule parameters in the osr_params as well? And can osr follow directly after the estimation and stoch_simul command?

I want to estimate the model, VD from stoch_simul (which timeperiod is displayed in the matlab window? Or is it an average?) and then an optimal policy analysis of the monetary policy, like minimize the variances of inflation, output and interest rate?

Thank you. I was trying to run conditional VD in the estimation command, but I switch to the stoch_simul (as discussed above earlier) and I’m fine with that.

Anyway, I still doesn’t manage to get perfect Brooks and Gelman (1998) plots, this is the best I’ve got

What could be the reason for this? Could the standard errors of the priors be related? I’m using 0.05-0.1 for most priors. I’ve tried to change some with different results.