Dear all,

I would like to ask several problems about bayesian estimation . The first problem is whether Bayesian estimation is sensitive to the value of parameters. Because a certain value of parameter, bayesian estimation can be carried out. However, if we change a little of value of parameter, Bayesian estimation can not be carried out. and it shows ‘ Matrix must be positive definite. ’.

The second problem is about the data of bayesian estimation. For example，I have data on output and investment. When I was brought it into the model separately，the model can run. But when I use both of them at the same time， it also shows ‘ Matrix must be positive definite. ’.

I don’t understand why this happens. Is that normal? I hope I clarify my question，can anyone answer my doubts? Thank you.

# Question about bayesian estimation

**aibenaimer1**#1

**aibenaimer1**#2

For example，in lowrisk.mod, Reciprocal elasticity of labor supply elasticity **gamma** equal to 0.4, lowrisk.mod can be able to run , however when **gamma** equal to 0.5, lowrisk.mod cannot be able to run.

I am really puzzled. Is this a common problem？Or is there any problem with my model?

data.xls (33 KB)

lowrisk.mod (5.7 KB)

**aibenaimer1**#4

jpfeifer, I have searched for the forum and looked ‘A Guide to Specifying Observation Equations for the Estimation of DSGE Models’. I change model-local variable using the #-operator in the model-block.

But it showed ‘ERROR: lowrisk.mod: line 130, cols 1-18: r_ss has wrong type or was already used on the right-hand side. You cannot use it on the left-hand side of a pound (’#’) expression’.

Did I make a mistake in some place? What am I missing?

data.xls (33 KB)

lowrisk.mod (5.9 KB)

**aibenaimer1**#6

jpfeifer, Thank you very much. The problem was solved.

I want to ask another question about the using data of bayesian estimation. If I use different data in the same model ,for example, using output data at a time, using output, investment and interest data at another time. Is there any possibility of great difference for impulse response diagram and variance decomposition ？

**jpfeifer**#7

Yes, what you match does matter. See e.g.

https://onlinelibrary.wiley.com/doi/abs/10.1002/jae.1106