Hi, for my thesis I’m writing the code for the model by Gertler and Karadi related to the paper “A model of unconventional monetary policy (2011)”. I also have to make the Bayesian estimation on the euro area data. Can you tell me how to enter the steady state equations in a non-log linearized model with also the initval block for bayesian estimation? Because I know that the way I put them in is incorrect as it does not give me the right IRFs. Thank you for your help

gk2607.mod (11.3 KB)

You should not have auxiliary parameters for the steady state values but rather directly have the computations in a `steady_state_model`

block.

Thanks a lot for your reply. I modified the model by adding the steady_state_model block. Unfortunately, however, by doing this I obtain NaN in the residuals. What could it be due to? Could there be a problem in the steady state equations? Auxiliary parameters for the steady state values also appear in the model equations, how should I rewrite them without using this auxiliary parameters?

gktest.mod (11.1 KB)

If you need auxiliary parameters, set them in the steady state file. However, some parameters can be endogenously determined by using the `steady_state`

operator.