Error in computing likelihood for initial parameter values Blanchard & Kahn conditions are not satisfied: indeterminacy

Estimation
1

Dear professors:
I’m a beginner, and want to estimate a dsge model, but alwasys get this error messgae.
Here is matlab display:
Using 64-bit preprocessor
Starting Dynare (version 4.6.4).
Calling Dynare with arguments: none
Starting preprocessing of the model file …
Found 24 equation(s).
Evaluating expressions…done
Computing static model derivatives (order 1).
Computing dynamic model derivatives (order 1).
Processing outputs …
done
Preprocessing completed.

Residuals of the static equations:

Equation number 1 : 0 : Lagrange multiplier
Equation number 2 : 0 : euler equation
Equation number 3 : 0 : money demand
Equation number 4 : 0 : resource restriction
Equation number 5 : 0 : aggregated production
Equation number 6 : 0 : inflation evolution
Equation number 7 : 0 : price dipersion
Equation number 8 : 0 : auxiliary x1
Equation number 9 : 0 : auxiliary x2
Equation number 10 : 0 : optimal price setting
Equation number 11 : 0 : optimal wage setting
Equation number 12 : 0 : auxiliary h1
Equation number 13 : 0 : auxiliary h2
Equation number 14 : 0 : wage evolution
Equation number 15 : 0 : marginal cost
Equation number 16 : 0 : fisher equation
Equation number 17 : 0 : policy rule
Equation number 18 : 0 : money supply
Equation number 19 : 0 : technology shock
Equation number 20 : 0 : preference shock
Equation number 21 : 0 : output observation equation
Equation number 22 : 0 : inflation observation equation
Equation number 23 : 0 : interest rate observation equation
Equation number 24 : 0 : money supply observation equation

EIGENVALUES:
Modulus Real Imaginary

   4.996e-16       -4.996e-16                0
      0.3765           0.3765                0
      0.7269           0.7269                0
      0.7825           0.7825         0.006234
      0.7825           0.7825        -0.006234
      0.8531           0.8531                0
         0.9              0.9                0
         0.9              0.9                0
       1.002            1.002                0
       1.021            1.021                0
       1.123            1.123                0
       1.265            1.265                0
       1.359            1.359                0
    9.05e+16         9.05e+16                0
   6.284e+48        6.284e+48                0

There are 7 eigenvalue(s) larger than 1 in modulus
for 7 forward-looking variable(s)

The rank condition is verified.

STEADY-STATE RESULTS:

lamb 2.62215
c -0.981156
i -3.30962
n -0.95885
y -0.981156
pi 0.0295588
pi_star 0.0988325
w -0.201313
m 1.86438
mc -0.201313
vp 0.0223054
x1 3.2317
x2 3.34475
w_star -0.106823
h1 2.63241
h2 2.92156
r 0.00631993
a 0
gm 0
v 0
y_obs 0
pi_obs 0
i_obs 0
gm_obs 0
MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.

You did not declare endogenous variables after the estimation/calib_smoother command.
Posterior IRFs and forecasts will be computed for the 24
endogenous variables of your model, this can take a long
time …

Choose one of the following options:

[1] Consider all the endogenous variables.
[2] Consider all the observed endogenous variables.
[3] Stop Dynare and change the mod file.

options [default is 1] = 1

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 32)
Blanchard & Kahn conditions are not satisfied: indeterminacy.

Error in print_info (line 32)
error(message);

Error in initial_estimation_checks (line 196)
print_info(info, DynareOptions.noprint, DynareOptions)

Error in dynare_estimation_1 (line 164)
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 nk_exp_wage.driver (line 537)
oo_recursive_=dynare_estimation(var_list_);

Error in dynare (line 293)
evalin(‘base’,[fname ‘.driver’]) ;

Error in dynareee (line 4)
dynare nk_exp_wage;

and this is my model and datafile
data.mat (887.2 KB)
nk.mod (4.9 KB)

2

Use

estimated_params_init(use_calibration);
end;

and set prior_trunc=0

3

thanks professor for you reply ,I modify the model like this:
estimated_params_init(use_calibration);

alphai,0.94;

alphay,0.2;

alphapi,1.5;

alpham,0.8;

taum,0.7;

taupi,0.2;

tauy,0.7;

stderr e_i,0.01;

stderr e_m,0.01;

end;

varobs y_obs pi_obs i_obs gm_obs;

estimation(datafile=data,mode_compute=6,mh_replic=2000,mh_jscale=0.8,mode_check,prior_trunc=0,bayesian_irf,forecast=20);

and get this erorr:

MODEL_DIAGNOSTICS: No obvious problems with this mod-file were detected.
Attempt to reference field of non-structure array.

Error in nk.driver (line 515)
tmp1 = find(estim_params_.param_vals(:,1)==15);

Error in dynare (line 293)
evalin(‘base’,[fname ‘.driver’]) ;

Error in dynareee (line 4)

4

I would need to see the full file.

5

Thanks a lot ,Prof. Jpfeifer. I have changed the taylor rule and solved the problem.
Although I still confuse about the form of taylor rule.
And thanks again.