I am estimating a DSGE model and wanted to verify whether I have correctly specified model local variables. I used " A Guide to Specifying Observation Equations" to guide me but am still unclear if I have done so correctly.
The estimation runs however I am not sure if the estimation results are correct. I am replicating the model and when I compare the estimation results in Dynare with the ones found in the paper some parameter values are different. For example the habit formation parameter estimate is 0.14 where as in the paper it is 0.5, does this suggest there is an error in the estimation?
Many Many Thanks!
leeper_closed_est10b.mod (15.9 KB)