Good morning.
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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).
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It is linear, I computed by hand the log-linearisation of the theoretical model around the steady state.
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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)”
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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).
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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.
Best regards,
Paul Cahu
flat_irf.mod (23.2 KB)