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Hi

I get the error message that "you try to raise a negative number to a non-integer power".
Is there a way around this problem? I use Eviews 7.

This is caused in the process of estimating the parameter of risk aversion gamma in (C(t+1)/C(t))^gamma which appears in an euler equation of the consumption asset pricing model.

Without trying to be flippant, the only way around that problem is to not raise a negative number to a non-integer power.

One solution is using a loglinear transformation of the Hansen-Jagannathan bound but this would imply the assumption that the correlation of the stochastic discount factor and the volatility of consumption growth is equal to minus 1.

I realize this is a complicated question, see the discussion at http://math.stackexchange.com/questions ... ve-numbers