Good afternoon,

I am trying to estimate a model with procyclical leverage in the banking sector. Whether I use mode_compute 4, 6, or 9, I get the following error message:

Error using chol

Matrix must be positive definite.

I have tried to run an identification analysis, in order to see if some parameters are not correctly identified; however, I get:

==== Identification analysis ====

Testing prior mean

Evaluating simulated moment uncertainty … please wait

Doing 492 replicas of length 300 periods.

Simulated moment uncertainty … done!

Error using .*

Matrix dimensions must agree.

Error in identification_analysis (line 225)

deltaM = deltaM.*abs(params’);

I have searched the forum but I didn’t see this issue arising a lot. Please note that my shocks are *not* correlated. Could someone help?

PC.zip (14.4 KB)