A Two Country Model Autocorrelation Problem

Dynare help (legacy posts)
1

Hi all

I have a two country model that generates the same autocorrelation between all variables with the exception of one. I am not sure what is the problem. I would appreciate any help.

Thanks
NK-two countries.mod (4.05 KB)

2

You only have one shock activated. All other have 0 variance.

3

Hi jpfeifer

Yes, I want to have only that shock initially. It is a monetary policy shock. Is there a reason why it generates equal autocorrelation between all variables? I am not sure if I am missing something here or there is something wrong in the specification of the model.

4

Hard to say. There must be something in your model that implies that all variables move proportionally in response to a TFP shock.