I am trying to run IRFs for an interest rate shock. My model is the analytically tractable OLG model of Gertler 1999: Government Debt & Social Security in a Life-Cycle Economy. Does it make sense that my IRFs fluctuate around the initial steady state before gradually falling back to initial equilibrium? I ask because the IRFs that I have seen so far usually are smooth curves.
Gertler1999.mod (1.9 KB)