I try to do a robustness check when estimating Taylor rule with a reaction to 1)current inflation, 2)expected inflation. Therefore, the Taylor in Dynare code look
1)Rhat = (1-rR)rqqinf + (1-rR)rpipihat+ry*(1-rR)Yhat+rRRhat(-1)+eRhat; for current inflation
2)Rhat = (1-rR)rqqinf + (1-rR)rpipihat(+1)+ry*(1-rR)Yhat+rRRhat(-1)+eRhat; for expected inflation
Although I get estimated the model with a reaction to current inflation, I get an error when estimating the model with a reaction to expected inflation. Here is the error message:
??? Error using ==> chol
Matrix must be positive definite.
Error in ==> metropolis_hastings_initialization at 52
d = chol(vv);
Error in ==> random_walk_metropolis_hastings at 43
ix2, ilogpo2, ModelName, MhDirectoryName, fblck, fline, npar, nblck, nruns, NewFile, MAX_nruns, d ] = …
Error in ==> dynare_estimation_1 at 1057
Error in ==> dynare_estimation at 62
Error in ==> A_new at 311
Error in ==> dynare at 132
Could you help me on this, please?
I enclose my Dynare code and data used for the estimation.
Many many thanks in advance,
A_new.mod (4.29 KB)
data_new.m (3.49 KB)