Observed variables

I’m new using dynare. I’m trying to stimate a model with 84 variables and 84 equations. In addition I have three exogenous observed variables. So, I followed the recomendations of Pfeifer’s guide adding the name of the variables in the list of endogenous variables, then the same names with “_obs”. I added three equantions in the model section and before the estimation command I added the observed variables with the command varobs. Finally, I added the data in the stimation command. The error message says 87 equations and 90 endogenous variables. I’m using a xls file I don’t know if the problem is the data or something else.


I would need to see the files.

At this point the code has many issues that I’m trying to fix. But I need to fix this first.
Here the code and data.base_ss_v2.xls (26.5 KB) ss_v2.mod (12.9 KB)

I am not following what you are doing in your code. You have three identities

p_oil_obs = p_oil; 
v_obs = v;	
ap_obs = ap;

defining three variables. But that still leaves 87 other variables with 84 equations while you stated that you have 84 variables in 84 equations.

I think I understand your point. If I add identities instead equantions I would have more endogenous variables than equations. However, in your guide (page 16) you used an indentity for the interest rate (R_obs=R), so I get confused.

So the solution could be to add a kind of shock or a process in those aditional equations and then specify the shock?

Before moving to estimation, you need a model that runs with simulations. Only then you should add the equations defining the observables.

But if I have 84 variables and 84 equations, and three aditional observable variables how would it runs without any information about the observable variables. Can I treat them as exogenous variables in varexo?
After that, if the simulation runs, How can I specify the equations to treat them as observable variables?.

For the three additional observable variables there would be three equations defining them.

In your previous answer you said that the model must run berofe defining the equations for this variables. But if I can’t use data to treat them as observable variables to make the model run, can I avoid _obs and treat them as a exogenous variables with their respective equations?

If those variables are exogenous, then you should define them as such.

Thank you.
Last question.
The examples that I already have seen about varexo refers to shocks. Can you recomend me a guide or something else about exogenous variables.

In the context of stochastic simulations with their stationary setup, exogenous variables are usually shocks. It’s different for perfect foresight simulations. I am not aware of any guides in this respect.