Hi,
Could anybody tell me how to deal with the issue of red plots in the mode_check graphs? Is there any general way to solve such problems?
Thank you very much,
S.
If you mean red dots, the answer in general is no. For example, if these dots are BK violations, there is nothing you can do. The model simply has no unique determinate solution for these parameter values. That’s why the mode cannot be there. As this is a feature of your model, the only thing you could do is write a different model.
The only case where you can do something about it is when the dot is associated with Dynare being unable to find the steady state for particular parameter values. In this case, providing a steady state file helps. But this is hardly ever the case.
What matters in the end is that the mode is really at the highest point of the posterior and is not a corner solution