I am having the exact same IRFs when I am trying the first order and second order approximation. Shouldn’t there be difference due to the second moments?
I am beginner with Dynare so sorry in advance if this is trivial.
I am having the exact same IRFs when I am trying the first order and second order approximation. Shouldn’t there be difference due to the second moments?
I am beginner with Dynare so sorry in advance if this is trivial.
That very much depends on whether your nonlinearity is strong.
Thank you for this answer.