# Indeterminacy of estimated results

**URL:** <https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651>\
**Category:** Dynare help (legacy posts)\
**Created:** [29 July 2012 14:05 UTC](https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651 "2012-07-29T14:05:59Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![m\_53cek](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/5f8ce5/32.png) [@m\_53cek](https://forum.dynare.org/u/m_53cek)\
**Post date:** [29 July 2012 14:05 UTC](https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651/1 "2012-07-29T14:05:59Z")

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Hello,

I estimated a small-open economy DSGE model and estimate it on data for Slovenia. When I try to simulate the model using estimated parameter values as calibrated values in stock\_simul command, I get the message that I have indeterminacy problem. Is it possible that the estimation results in such parameter values that the Blanchard-Kahn conditions are not varified?

Thank you and kind regards,  
Matic

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [30 July 2012 14:54 UTC](https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651/2 "2012-07-30T14:54:29Z")

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That should not be possible. Could you please post the mod-file and the parameter values from estimation you calibrate.

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**Author:** ![m\_53cek](https://forum.dynare.org/letter_avatar_proxy/v4/letter/m/5f8ce5/32.png) [@m\_53cek](https://forum.dynare.org/u/m_53cek)\
**Post date:** [30 July 2012 16:39 UTC](https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651/3 "2012-07-30T16:39:12Z")

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Hey,

I posted the mod file, I used for estimation. The parameter values I get are:

beta = 0.99;  
eta = 1.5401;  
sigma = 2.2648;  
gamma = 0.2980;  
a = 0.3996;  
thetap = 0.6686;  
alphae = 0.7682;  
alphay = 0.8211;  
kappah = 0.2375;  
kappaw = 0;  
kappay = 0;

If I set this parameter values in the parameters section and use the: stoch\_simul y pih omegah pi gap delta; command, I get this message:

??? Error using ==\> print\_info at 42  
Blanchard Kahn conditions are not satisfied: indeterminacy

Thank you and kind regards,  
Matic  
[ModelD\_repaired\_a\_estimation\_flex\_wage\_one.mod](https://forum.dynare.org/uploads/default/original/2X/6/6dc96d7c3c5baa5578ea3c83266bc3defe9c392e.mod) (1.48 KB)

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [30 July 2012 19:21 UTC](https://forum.dynare.org/t/indeterminacy-of-estimated-results/2651/4 "2012-07-30T19:21:50Z")

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The reason is that your model features a unit root. One eigenvalue is exactly 1. If you want this eigenvalue to count as an unstable one as in estimation (i.e. you think your model is correct with the unit root), where lik\_init=1 by default sets qz\_criterium to 1-1e6, put

`options_.qz_criterium=1-1e-6;
`  
before stoch\_simul