Issue on data collection: negative ECB rates

Dear all,

I was trying to estimate DSGE model using Bayesian method. For this, I was trying to update data gathered by Gerali et al. (2010). My model features Taylor rule to set the European policy rate. However, EONIA rate (as well as EURIBOR) has gone negative recently, which was used in original paper. Moreover, seems like the series is not stationary anymore. Is there any way to resolve this issue? I am a little bit puzzled whether it is possible to use negative rates in estimation.

Best regards.

In linear(ized) models, there are no natural bounds to variables. Thus, having negative values is not a problem. Regarding stationarity, the post at

comes to mind

Professor,

Thank you for your response!