Understanding the Bayesian Computation of Smets Wouters (2007)

Estimation ML/Bayesian estimation
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  1. I was saying that degeneracy is not the problem here. You are estimating exactly two structural parameters, keeping all other parameters fixed. For that reason, only those two parameters vary with the MCMC draws.
  2. The standard deviations parameters are still estimated but stored in M_.Sigma_e. Thus, it’s the joint likelihood.
  3. How many draws did you set for the TaRB?
  4. I am not sure I understand the question. The normal distribution is completely characterized by the first two moments. Those are the ones you want to match.
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