This study applies the filtering technique to system identification to study the data filtering-based parameter estimation methods for multivariable systems, which are corrupted by correlated noise -an autoregressive moving average process. To solve the difficulty that the identification model contains the unmeasurable variables and noise terms in the information matrix, the authors present a hierarchical gradient-based iterative (HGI) algorithm by using the hierarchical identification principle. To improve the convergence rate, they apply the filtering technique to derive a filtering-based HGI algorithm and a filtering-based hierarchical least squares-based iterative (HLSI) algorithm. The simulation examples indicate that the filtering-based HLSI algorithm has the highest computational efficiency among these three algorithms. 1 Introduction System modelling is the foundation of control [1, 2], and multivariable systems exist widely in process industries [3], such as the distillation column [4], the internal combustion engine [5] and the industrial wastewater treatment [6]. Parameter estimation has become a hot issue [7, 8], especially in system control [9], signal processing [10] and system identification [11, 12]. For multivariable systems, Mobayen [13] provided a robust tracking controller for multivariable delayed systems with input saturation via composite non-linear feedback; Panda and Vijayaraghavan [14] solved the parameter estimation problems of linear multivariable systems using the sequential relay feedback test; Ding [15] presented the coupled least squares identification algorithm for multivariable systems.The main feature of multivariable systems is that the input and output variables of the systems are relevant and coupled, and the difficulty of parameter estimation for such systems is that the system model both contains parameter vectors and parameter matrices, and the unmeasurable variables as well. The hierarchical identification is based on decomposition and can be applied to obtain the parameter estimates of the complex multivariable systems [16]. In this literature, Schranz et al. [17] studied the hierarchical parameter identification problems in models of respiratory mechanics; Zhang et al. [18] used the auxiliary model identification idea and the hierarchical gradient-based iterative (HGI) method for solving the parameter estimation problem of the multivariable output-error moving average (MA) systems; Han et al. [19] presented a hierarchical least squares-based iterative algorithm for multivariable systems with additive MA noises by using the decomposition technique.The iterative algorithms update the parameter estimates using the bath data and can be applied to scalar systems and multivariable systems [20], linear systems and non-linear systems [21,22]. The filtering technique can extract the useful information from noisy measurement data for parameter estimation [23,24] and has been used in signal processing and communication [25][26][27], and neural network [28,29]. The filtering techn...