Hi all,

I get the following error message when running the code: “Blanchard & Kahn conditions are not satisfied: no stable equilibrium.”.

I’m currently looking for the cause, but it’s not clear. If anyone knows, I would be grateful if you could point out what went wrong.

Thank you in advance!

Hz.mod (11.8 KB)

See

Dear Johannes,

As your suggestion, I used diffuse_filter in the estimation-command.However, new problems arised.

There are 15 eigenvalue(s) larger than 1 in modulus

for 15 forward-looking variable(s)

The rank condition is verified.

initial_estimation_checks:: The forecast error variance in the multivariate Kalman filter became singular.

initial_estimation_checks:: This is often a sign of stochastic singularity, but can also sometimes happen by chance

initial_estimation_checks:: for a particular combination of parameters and data realizations.

initial_estimation_checks:: If you think the latter is the case, you should try with different initial values for the estimated parameters.

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 initial_estimation_checks (line 153)

initial_estimation_checks:: The forecast error variance in the multivariate Kalman filter became singular.

error initial_estimation_checks (line 153)

error(‘initial_estimation_checks:: The forecast error variance in the multivariate Kalman filter became singular.’)

error dynare_estimation_1 (line 164)

oo_ = initial_estimation_checks(objective_function,xparam1,dataset_,dataset_info,M_,estim_params_,options_,bayestopt_,bounds,oo_);

error dynare_estimation (line 105)

dynare_estimation_1(var_list,dname);

error papert.driver (line 1150)

oo_recursive_=dynare_estimation(var_list_);

error dynare (line 293)

evalin(‘base’,[fname ‘.driver’]) ;

Now your are facing stochastic singularity, because you are not allowed to observed a perfect linear combination of variables.

Take

```
Ghat = That*Tss/Gss+Mhat*Mss/Gss-(Mhat(-1)-pihat)*Mss/(Gss*piss);
```

From what I can see, all variables in that equation are declared as observed.