Hello!
I run my mod file in dynare, and the result looks ok,
but why the result can’t product the picture?
In fact there have warning for : Log of zero
But when I check I can’t find where of the “Log of zero”
Can someone tell me where I got trouble…
Really thanks for your help!!
yoyo2.mod (2.74 KB)
You need either pruning or order=1 in stoch_simul. Otherwise your simulations used for IRF generation are explosive.
Hello jpfeifer:
Do you how to explain why the IRF explose?
Best Regards,
Veronica
Roughly speaking because approximations are only locally accurate and the quadratic terms introduced in second-order approximations tend to explode when shocks are large. Thus, a large shock might start a trajectory that leads you away from steady state. See the Kim, Kim, Schaumburg, Sims paper at ideas.repec.org/p/tuf/tuftec/0505.html
Thank you so much!