Hi! I’m trying to learn how to do Bayesian estimation in dynare.

I have this NK model which is very similar to Sims and Wu (2020, JME) and Karadi and Nakov (2021, JME).

I have two related questions.

- As the authors of those papers do, I simulate the model. To do that, I have a separate file where I compute the steady state recursively out of some calibrated parameters. I understand that parameter dependence can be an issue in estimating the model, so I’m wondering if the way I call the steady state file in the mod file allows parameters to be updated. Alternatively, how should I define a steady_state_model block?
- I’m having a little issue defining parameter dependence. I understand that the value of some parameters will affect the steady state, but how should I treat this in the model?

These file runs, but I wanna make sure the output is reasonable, which, at the moment, is not

Thanks!

model_estimation.mod (8.2 KB)

data_use_ACGM.mat (12.6 KB)

estimation_params.m (7.9 KB)