I want to have relative irfs and percentage std. devs. I already have my model in levels, but since it’s a medium scale model (~70 variables), I want to avoid manually setting the
exp(x) substitution for each variable in the .mod file. Then I just thought that I could create auxiliary variables that represent the logs in this way:
var x y z
% then the logs
lx ly lz
% Regular levels model equations
% Assigning the logs
lx = exp(x);
ly = exp(y);
lz = exp(z);
Therefore for percentage second moments and relative irfs I’d only work with
lz .Is that correct?
Thanks! Also I was checking the Guide to Specifying Observation Equations, I can interpret that it don’t matter if I only use the exp() substitution in a subset of the equations, e.g. if I’m only interested in consumption relative irfs, only transform consumption to logs (with the exp()).
Also, regarding variables that are rates (e.g. nominal interest or unemployment rate), it’s not necessary to perform the transformation since as rates, percentage deviations would have kind odd interpretation, is that correct?
Yes, selectively performing an exp()-substitution for some variables is correct as long as you consistently replace all occurrences.