Hi,

I tried to get the optimal values of parameters for simple rules using “osr”. However sometimes the parameter values turned to be very very huge around 1000. I guess this is due to the shocks in my model. My model has 10 exogenous shocks, I estimated the standard deviations of these shocks and use these estimates to do simulations.

shocks;

var e_rnf; stderr 0.0636;

var e_finf;stderr 0.0636;

var e_yf;stderr 0.0637;

var e_a;stderr 0.0754;

var e_ix;stderr 2.5744;

var e_efps;stderr 0.5792;

var e_uips;stderr 0.0651;

var e_rn;stderr 0.0638;

var e_pef;stderr 0.3385;

var e_g; stderr 1.1598;

end;

optim_weights;

infcpi 1;

y 1;

end;

osr_params rh_infcpi rh_y rho_rn ;

rh_infcpi =1.8508;

rh_y =0.1225;

rho_rn=0.7539;

osr;

The values I got are:

rh_infcpi 1781.1

```
rh_y 283.325
rho_rn -921.083
```

Objective function : 0.947917

But I found if I shut down the shock with the highest standard deviation (var e_ix;stderr 2.5744), the parameter values obtained from “osr” are very good and sensible.

```
rh_infcpi 1.85777
rh_y 0.387792
rho_rn 0.608402
```

Objective function : 0.0559598

I don’t know what is the reason for this problem. The standard deviation of the shock e_ix is just an estimate of my model, it is much larger than the other ones. Is this a signal that there is something wrong with my estimates? Why osr gives such strange parameter values?

Please help me on this problem. Thanks so much!

Bests

Conglin