I have an issue with a DSGE that im trying to build. Is an RBC-SOE model with labor market frictions. The main issue is that, looking at the policy and transition functions output, the commodity price shock affects negatively the household consumption, and that the agents wages do not affect the consumption. I can’t really identify what is wrong here. Below is attached the mod file. I have to add that H and L letters index that there are heterogeneous workers, where H is for high-skilled, and L is for low-skilled.
I appreciate any help !
Thanks for your reply and the huge help, Emmanuel!
Indeed, it was a parameter calibration issue. I’m now trying to learn which is the correct calibration in order to obtain reasonable results.
Regarding your question in point 6.: if you look the output for “POLICY AND TRANSITION FUNCTIONS”, there is how wH(-1) and wL(-1) affect every endogenous variable in the model. In this regard, one may look that the coefficient for wH(-1) and wL(-1) over consumption (c) is zero (0). Although, I’m thinking thay maybe i’m mistaken, because wages have to affect consumption contemporaneously, not with a lag.