Dear All.
I rencently have a problem when I was making impulse response . the model can run ,but when I put calvo sticky price in the mode , many variable Volatility continued too many period , the volatility of inflation is less than 100 times the output volatility . Can anyone help me to check if the calvo sticky price modular is right, thank you ,here is the code :
pstar = ( ( 1 - xip ) * ( ( 1 - xip * ( ( pietarget^( iota ) * ( pie(-1)^( 1 - iota ) ) / pie )^( 1 / ( 1 - lambdaf ) ) ) ) / ( 1 - xip ) )^( lambdaf ) + xip * ( ( ( pietarget^( iota ) * pie(-1)^( 1 - iota ) ) / pie ) * pstar(-1) )^( lambdaf / ( 1 - lambdaf ) ) )^( ( 1 - lambdaf ) / lambdaf );
Fp = lambda * y + beta * xip * ( ( ( pietarget^( iota ) * pie^( 1 - iota ) ) / pie(+1) )^( 1 / ( 1 - lambdaf ) ) ) * Fp(+1);
Kp = lambda * lambdaf * s * y + beta * xip * ( ( pietarget^( iota ) * pie^( 1 - iota ) ) / pie(+1) )^( - lambdaf / ( lambdaf - 1 ) ) * Kp(+1);
Kp = Fp * ( ( 1 - ( xip * ( ( pietarget^( iota ) * pie(-1)^( 1 - iota ) ) / pie )^( 1 / ( 1 - lambdaf ) ) ) ) / ( 1 - xip ) )^( 1 - lambdaf );