Hi jpfeifer ,

Just seeing your response now. I agree. It doesn’t seem sensible to simple delete a line of code. I had a look at the functioning version of the SW model for Dynare 4 which you are referring to. Unfortunately, I seem to be getting an error when I run it:

Starting Dynare (version 4.2.5).

Starting preprocessing of the model file …

ERROR: usmodel_shock_decomp.mod:186.21-26: syntax error, unexpected NAME, expecting PARAMETER_SET

??? Error using ==> dynare at 114

DYNARE: preprocessing failed

**When I remove the line at 186 relating to the shock composition, I then get this error:**

You did not declare endogenous variables after the estimation command.

This version of Dynare cannot estimate non linearized models!

Set “order” equal to 1.

??? Error using ==> inverse_gamma_specification at 121

inverse_gamma_specification:: Failed in solving for the hyperparameters!

Error in ==> set_prior at 224

[bayestopt_.p6(k(i)),bayestopt_.p7(k(i))] = …

Error in ==> dynare_estimation_init at 124

[xparam1,estim_params_,bayestopt_,lb,ub,M_] = set_prior(estim_params_,M_,options_);

Error in ==> dynare_estimation_1 at 37

[data,rawdata,xparam1] = dynare_estimation_init(var_list_);

Error in ==> dynare_estimation at 62

dynare_estimation_1(var_list,varargin{:});

Error in ==> usmodel_shock_decomp at 412

dynare_estimation(var_list_);

Error in ==> dynare at 120

evalin(‘base’,fname) ;