Hello. I am trying to estimate a DSGE model using ML, but I am getting the following error:

"POSTERIOR KERNEL OPTIMIZATION PROBLEM!

(minus) the hessian matrix at the “mode” is not positive definite!

=> posterior variance of the estimated parameters are not positive.

You should try to change the initial values of the parameters using

the estimated_params_init block, or use another optimization routine.

Warning: The results below are most likely wrong!

In dynare_estimation_1 (line 694)

In dynare_estimation (line 89)

In estim (line 424)

In dynare (line 188)"

I started with a model completely calibrated, so I started to estimate some parameters. Only when I estimate with too many parameters, I get the “warning” above.

I tried to change the initial values and also to change the mode_compute to 6, but the error persists.

My model is based on “Bhattarai, Saroj, Jae Won Lee, and Woong Yong Park. “Policy regimes, policy shifts, and US business cycles.” (2012).”

I am newbie with Dynare, so I hope someone could help me.dados_battharai.mat (9.3 KB)

estim.mod (5.1 KB)