Hello everybody!

For my master thesis I am trying to estimate a two-sector open economy DSGE model for Germany and the Rest of the Euro area following the theoretical framework of Ferrero et al. (2008). I brought the estimation to run and the irfs seem to have reasonable results, however when I try to compute conditional variance decompositions for production, consumption, trade balance and current account the following error messages show up:

Index exceeds matrix dimensions.

Error in dsge_simulated_theoretical_variance_decomposition (line 113)

Decomposition_array(linea,(i-1)*nexo+j) = tmp{2}(i,j);

Error in posterior_analysis>job (line 62)

dsge_simulated_theoretical_variance_decomposition(SampleSize,M_,options_,oo_,‘posterior’);

Error in posterior_analysis (line 34)

oo_ = job(type,SampleSize,arg1,arg2,arg3,options_,M_,oo_);

Error in compute_moments_varendo (line 101)

oo_ =

posterior_analysis(‘decomposition’,var_list_(i,:),M_.exo_names(j,:),],options_,M_,oo_);

Error in dynare_estimation_1 (line 818)

oo_ = compute_moments_varendo(‘posterior’,options_,M_,oo_,var_list_);

Error in dynare_estimation (line 89)

dynare_estimation_1(var_list,dname);

Error in thesis_test2 (line 502)

dynare_estimation(var_list_);

## Error in dynare (line 180)

evalin(‘base’,fname) ;

Unfortunately I don’t know what problem the error messages indicate and how it can be solved in order to get valid variance decompositions.

Another issue I am having with the estimation is that the posterior distributions for some parameters fit the priors very poorly and seem to be concentrated far too narrowly around the posterior mean. Is this solely due to the fact that my model is relatively simple compared to more complex models like e.g. Quest or could this have another reason?

Help would be very much appreciated. Thanks in advance!