Hi
would appreciate if someone could explain (or to point to a study in which it is explained) what is our Criterion for choosing variable in varobs block?
best regards
See Remark 7 (Which Observables for Estimation?) in Pfeifer (2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models” at sites.google.com/site/pfeiferecon/Pfeifer_2013_Observation_Equations.pdf
Thank u very much