The IRF of the code does not converge to the steady state. I have changed the variance of the shock and increased the periods for convergence but still same.
Any ideas?
Thanks in Advance.
You may have a unit root in the model, meaning that the shocks generate effects that are permanent. Does Dynare give you theoretical moments or are they NaN?
Dynare gives theoretical moments, none of them is NaN.
Then you might want to post the mod-file so people can look into it.