I hope to find any friendly spirits that can help me, I will be very grateful if you can. I´ve got a problem with my model set up in excel and the solver that I can´t find the solution to, so I´m hoping that any of you guys can help me.
I´m trying to maximize a likelihood function based on a set of adjustable cells and columns Q-Y that are linked to these adjustable cells and my variables used in the model.
An explanation of few of the columns linked to the adjustable cells is:
O: an equation based on the first 2 adjustable cells and 1 variable
P: the cumulative distribution function of O
Z: This is the goal/target equation as shown in the attached picture.
AA: This is the difference between the estimated inflation and the real inflation
AB: This is the likelihood of obtaining this difference, which I want to maximize.
My problem is three-folded:
1) Im not really sure that the equation written in Z corresponds to the equation given in the picture?!
2) When I run the solver, the adjustable cells D and E never changes, even though they are linked to column O. Does anyone know how to connect everything so that the solver uses all the adjustable cells?
3) Solver is also very sensitive to starting values of the rest of the adjustable cells. Does anyone know a way to figure out the global results instead of just the local?
I know its a lot I ask for, but its really hard to work on this alone so I would really appreciate any input.
I have attached the excel 2007-file (look at the one in the next reply) and a picture of the model equation if you want to have a look at what I have done.