This seems strange because stochastic simulation runs fine on the calibrated model, and I can estimate the model if I drop one of the GDP related variables (i.e. Government investment or consumption for example). Also, estimation still doesn’t work when I initialize the Kalman Filter with the calibrated parameters. I don’t think there is a problem with the model- the model diagnostics all suggest the model is fine.
Just wondering if anyone had any tips on solving this problem? It would be nice to estimate the model with all of the components of closed economy GDP included if possible.