Dear All,

I recently had some problems with identification analysis in Dynare. Hopefully I could get some suggestions or comments from you.

I basically have the following two questions. For your reference, the required files are in the attached zip file.

- When I estimate my model first with mode_file option and then trigger the identification analysis, everything works fine. According to my understanding, in this case, the point-estimate identification is based on the prior mean. So the estimation stage in fact does not matter at all for the identificaiton. Then I try to run the identification analysis without estimation, I got the following error message:

Error using trustnleqn (line 28)

Objective function is returning undefined values at initial point. FSOLVE cannot continue.

Error in fsolve (line 376)

[x,FVAL,JACOB,EXITFLAG,OUTPUT,msgData]=…

Error in Experiment_steadystate (line 55)

[ld_ss,Fval,exitflag] = fsolve(@(x)LHS-varpsi*PIstarw_ss^(-eta*gamma_l)*x^gamma_l/…

Error in evaluate_steady_state_file (line 49)

[ys,check] = h_steadystate(ys_init, exo_ss);

Error in evaluate_steady_state (line 58)

[ys,params,info] = evaluate_steady_state_file(ys_init,exo_ss,M, …

Error in dynare_estimation_init (line 463)

[tmp1, params] = evaluate_steady_state(oo_.steady_state,M,options_,oo_,steadystate_check_flag);

Error in dynare_identification (line 131)

[dataset_,dataset_info,xparam1,hh, M_, options_, oo_, estim_params_,bayestopt_]=dynare_estimation_init(M_.endo_names,fname_,1, M_, options_, oo_,

estim_params_, bayestopt_);

Error in Experiment (line 532)

dynare_identification(options_ident);

Error in dynare (line 185)

evalin(‘base’,fname) ;

In my understanding, if I run the identification without estimation, prior mean should be used as default. But I got the above error, which is very confusing. To get better understanding, I then tried to include initial values of the paramters in the estimated_para block (line 297 to 331). This time, I still got the above error message. I don’t know if I have done anything wrong or is it a bug in Dynare?

- After I run my mod file with estimation and identification, I found my model has very big identification problem. This can be seen from the log file. If you run the mod file with estimation, the figures for identification analysis provide further evidence for identification problem. I am very confused. My model basically follows the literature except that I add one equation linking money growth rate with inflation, real money balance. It is an identity without parameters in the equation. Even though this is not usually included in the standard literature, it is always there implicitly implied in my model. I am wondering if this is going to impose important restrictions so that the identification crashes totally. How should I proceed to handle the problem?

Thanks a lot!!!

Experiment_Identification_Dynare.zip (45.8 KB)