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.
Do you how to explain why the IRF explose?
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