I am encountering an issue in my calibration exercise. After rearranging the CPOs, I obtain for my parameter the following equation,
My issue is with “sigma es”. All ratios and parameters present in the equation are already known, except for “sigma es”, which is a parameter I would like to estimate via bayesian estimation. That “sigma” represents an elasticity of substitution.
Can I specify to the “parameter” block in dynare the equation for the parameter “alpha d”, so that when it computes “sigma es” via the estimation block, dynare computes from the equation the final value for “alpha d” from the value of “sigma es”?
Or do I have to impose a value to “sigma es” in order to compute the value of “alpha d”?
Thank you in advance.