NAIRU and Kalman Filter

[sunny]

Thanks Trubador.....

Yes indeed mci & enf are monetary conditions index and inflation....what i was trying to do is to include IS equation and phillip curve equations in the potential growth model to have a complete model.....Hence the specification i had inthe workfile ...Will definately revisit my specifications, as per your advice...

But it will really help if you can tell me hat specifically you found ill defined...because all the equation i had, at least i though, were coming from the theory .. like MA(1) phillip curve , IS equation and potential growth as per clark ....


Secondly, just to be sure you would advise diffuse prior for the initialization of states....and for the coefficients random initialization (which i had in workfile)

Highly appreciative of all your help

Many thanks