I have read in the manual that,
“unit_root_vars is now deprecated and will result in no action, It was used to declare unit-root variables of a model so that a diffuse prior can be used in the initialization of the Kalman filter for these variables only.”
I am not sure exactly what is meant by the word “deprecated”.
Do I need to use this argument when my observed variables are random walks plus a drift? When I use the argument, Dynare seems to run and work properly. Without the argument, Dynare crashes.
Could some one please give me a status update on this argument. Is it needed? Can I do without this argument if I re-write my _steadystate.m file (by taking out the Y_obs = 1; lines for the trending observations perhaps?)
You shouldn’t need to use unit_root_variables. What is the error message when Dynare is crashing?
When I use unit_root_vars in the mod file I do not get an error and the estimation command completes successfully. Without unit_root_vars in the mod file I obtain the following:
??? Error using ==> initial_estimation_checks at 92
The seadystate values returned by BY_closed_extra_shocks_rwtech_steadystate.m don’t solve the static model!
Error in ==> dynare_estimation_1 at 334
Error in ==> dynare_estimation at 62
Error in ==> BY_closed_extra_shocks_rwtech at 218
Error in ==> dynare at 132
This error occurs immediately after the data is read.
My variables are C_obs, Y_obs, and W_obs. All are trending, so I had the following line in my mod file:
unit_root_vars C_obs, Y_obs W_obs;
and I also set the steady state value of these variables in my steady_state.m file to 1.
If I remove the unit_root_vars line in the mod file, should I remove the steady state values C_obs=1, Y_obs=1, and W_obs=1 in my steady_state.m file? Or give them some other value?