I perform a model comparison via the dynare command:
model_comparison (marginal_density=laplace) rob30_model1(0.5) rob30_model2(0.5);
Both models were estimated on slightly different datasets and rob30_model2 contains more estimated parameters. I obtain the following results:
Model Comparison (based on Laplace approximation)
Model rob30_model1 rob30_model2
Priors 0.500000 0.500000
Log Marginal Density 2677.598998 3733.456053
Bayes Ratio 1.000000 Inf
Posterior Model Probability 0.000000 1.000000
Based on this I have two questions:
What’s is the reason that I end up with a Bayes Ratio of 1:0?
In both models the prior distributions have been truncated for the estimation. So this would mean that the model comparison would be invalid anyway, correct?
Thanks for your help and sorry for the basic questions.