# Problem about estimation

**URL:** <https://forum.dynare.org/t/problem-about-estimation/6318>\
**Category:** Dynare help (legacy posts)\
**Created:** [1 July 2017 20:40 UTC](https://forum.dynare.org/t/problem-about-estimation/6318 "2017-07-01T20:40:55Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![lanfear](https://forum.dynare.org/letter_avatar_proxy/v4/letter/l/7ba0ec/32.png) [@lanfear](https://forum.dynare.org/u/lanfear)\
**Post date:** [1 July 2017 20:40 UTC](https://forum.dynare.org/t/problem-about-estimation/6318/1 "2017-07-01T20:40:55Z")

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Hi,

I encountered a problem with estimation. I am trying to estimate SOE model of Gali (2015) Chapter 8. This is my first estimation attempt so it could be a trivial issue but I will be very glad for any suggestion. I downloaded the code from Prof. Pfeifer’s GitHub page and tried to modify a bit. The code works perfectly for simulation. However, when I tried to include the estimation part I get the following message:

ESTIMATION\_CHECKS: There was an error in computing the likelihood for initial parameter values.  
ESTIMATION\_CHECKS: If this is not a problem with the set of options (check the error message below),  
ESTIMATION\_CHECKS: you should try using the calibrated version of the model as starting values. To do  
ESTIMATION\_CHECKS: this, add an empty estimated\_params\_init-block with use\_calibration option immediately before the estimation  
ESTIMATION\_CHECKS: command (and after the estimated\_params-block so that it does not get overwritten):

Error using print\_info (line 42)  
Blanchard-Kahn conditions are not satisfied: no stable equilibrium

so I tried the mode:6

estimated\_params\_init(use\_calibration);  
end;

then the estimation process begins but acceptance ratio remains at 0.

Could somebody help me?

Thanks,  
[abc.zip](https://forum.dynare.org/uploads/default/original/2X/f/f946ddfd7189f22542b3c77fad3966fad3333d58.zip) (13.6 KB)

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [2 July 2017 10:34 UTC](https://forum.dynare.org/t/problem-about-estimation/6318/2 "2017-07-02T10:34:38Z")

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You need to set the

```auto

```

option of estimation, because the model has a unit root.  
Also, do not use the two-sided HP-filter. See Remark 12 (Non-Causal Filters) in Pfeifer(2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models” [sites.google.com/site/pfeiferec … ations.pdf](https://sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf).

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**Author:** ![lanfear](https://forum.dynare.org/letter_avatar_proxy/v4/letter/l/7ba0ec/32.png) [@lanfear](https://forum.dynare.org/u/lanfear)\
**Post date:** [2 July 2017 20:31 UTC](https://forum.dynare.org/t/problem-about-estimation/6318/3 "2017-07-02T20:31:08Z")

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problem solved, many many thanks for the help.