For the dynamic under stoch_simul(order=2, irf=0) without “pruning”, is it common for simulated dynamic path (use simult_) with zero exogenous shocks to explode?

And for the dynamic under stoch_simul(order=2, irf=0, pruning) with “pruning”, I find the simulated dynamic path (use simult_) with zero exogenous shocks tend to have nominal interest rate below 1. does this imply that there is a problem with the model ?

To the second question, for such a counter-intuitive stochastic steady state result of a nominal interest rate below 1, would it affect the model’s simulation path in a larger way?

Is it necessary to find a way to increase the nominal interest rate in the stochastic steady state?

For example, increase the interest rate shock so that the nominal interest rate is greater than 1 and simulate the dynamics of other shocks on that basis.

Depending on the model, precautionary savings can push the interest rate down. But what you describe sounds strange overall. Are you sure the shock scaling is correct. See e.g.

In absolute terms, the size of my shocks should be in the normal range.

These values are derived from Bayesian estimation, I don’t know if I’m doing it right, they are taken from oo_.posterior_mode.parameters and oo_.posterior_mode.shocks_std.

shocks;
var e_z; stderr 0.043289397482863;
var e_cg; stderr 0.042447431523015;
var e_xg; stderr 0.070808098908449;
var e_trh; stderr 0.004620021752894;
var e_b; stderr 0.004646716194454;
var e_mp; stderr 0.049057652617625;
end;
stoch_simul(order=2, irf=0, pruning, nograph);

But it is indeed the size of the shock that leads to abnormal nominal interest rates.

Interestingly, when I set the standard deviation of all shocks to 0, I get the same simult_ results as under the setting that led to the anomalous nominal interest rate mentioned above.

By the way, does Perfect foresight have a function similar to simult_ that can be called for customization?