I am practicing the IRF matching approach using a basic New Keynesian model to estimate my model’s parameter values.
Specifically, I first estimated some parameter values in the basic NK model using the attached “NK_matching.mod.” The estimation results are as follows:
Next, I simulated the same basic NK model using the estimated parameters. In other words, I ran the “NK.mod” file that I attached. The simulation results are as follows:
The figures produced by ‘NK_matching.mod’ and ‘NK.mod’ should be identical because the parameter values used are equal. However, as you can see, the two figures differ. I don’t know why the results differ. Could you please explain why this happened and how I can fix it?
NK.mod (842 Bytes)
NK_matching.mod (3.1 KB)