I have written a quite cumbersome two sectors models in open economy (about 100 equations, most of which are dealing with sector prices and cross-sectorial demand, though hard to simplify).
It is linear, I computed by hand the log-linearisation of the theoretical model around the steady state.
When I run the identification command, I get no errors: “All parameters are identified in the model (rank of H); All parameters are identified by J moments (rank of J)”
My IRFs are however flat. It seems that the model stays blocked at the steady state (I get the famous “All endogenous are constant…” message).
My guess would be that my shocks may not be well specified, but I do not understand why. It seems to me that the linearity might be a problem. Sorry for it looks like a silly issue but I don’t understand it.
Would anyone be able to assist?
Thank you so much in advance.
flat_irf.mod (23.2 KB)