Hi, Professor Pfeifer
I build a small open economy model to study foreign reserve accumulation. I want to study the transition paths of some macro variables by changing the exogenous variable,e.g financial tightness. I run into a problem after running my mod file, I find the transition dynamics of endogenous variables are constant. Why does this situation happen? I upload two of my mod files in the attachment.
financial_friction1.mod (3.04 KB)
financial_friction.mod (2.57 KB)