I have a question relating to estimating DSGE model with Bayesian method
I wrote dynare file. At the the same time, I have data file. Before running estimating, what should I do? I mean do I need to conduct two following tests?
- The test for identification problem
- The test how actual data fit model. Normally, I saw literature that authors often report the actual data and predicted value (generated by Kalman Filter) on the same Graph to evaluate how the actual data fits the model