Dear Professor,
I am doing deterministic simulation, using simul. to plot the trajectory path of endogeneous variables after the shock a use rplot; however i would like to have them relative to steady state, so that the graphs of different variable are more easly comparable (i;e; i would like to have them as IRF so showing deviations from zero). how can i do that?
The easiest way is to define auxiliary variables that store deviations from steady state.
Thank you I managed to do it. however i have a doubt regarding interpretatiotn of results. I have to compare two scenarios, one with only initial shock and a second where a second shock applies in period 5. when comparing trajectory plots of the two, for some variables the trajectory diverge before the second shock realise. Is it possible or I am doing a mistake? if so is it due to the fat that in deterministic simulation agents have perfect foresight? I am confused because I was expecting the plot to coincide for the two scenarios until period five and than diverge. Thank you a lot for your help!
Yes, that is due to perfect foresight. Agents anticipate future shocks and react immediately.