I am trying to replicate the results found in chapter 8 of McCandless’ ABCs of RBCs. I have one mod file in levels and one that is log-linearized around the steady state but i have failed to arrive at solution. See attached files. Any help would be greatly appreciated. Thanks.
chp8.mod (803 Bytes)
chp8-1.mod (914 Bytes)
You appear to be mixing equations from Chapter 6 and Chapter 8, specifically the final two equations (for C and Y) . They don’t feature in the seven log-linearised equations provided by McCandless on page 205. I’ve attached a new mod file that should reproduce the IRFs in figures 8.2 and 8.3 of the book, and corrects some other typos in ‘chp8-1’.
chap82.mod (779 Bytes)
Thanks, i will check it out.