Hi, all

I am trying to use a DSGE model based on Adolfson 2005 to do forecast.

When I run identification command, there are 25 parameters can not be identified by model, after go through Dynare forums and found solution from this topic: Mode check-shock variance log likelihood kernel is flat, 19 of them can be identified after following jpfeifer’s advice. But I cannot figure out the identification problem in the rest 6 of them, which are :

xi_w ----- Probability with which a worker cannot reoptimize his wage

kappa_w ------Indexation parameter for wages

lambda_m_c_ss ---- Steady state time-varying markup in the imported consumption goods sector

lambda_m_i_ss ---- Steady state time-varying markup in the imported investment goods sector

tau_w_ss ------- Steady-state payroll tax

tau_y_ss ------- Steady-state labour income tax

could you please give me some advice about them? What will cause if we ignore identification problem and do estimation anyway?

Much appreciated!!

Helen

2012Q4.xls (172 KB)

data_2013Q2_insample.m (647 Bytes)

DSGE_Adolfson.mod (108 KB)