Hi,

I have a problem when I do simulation by dynare. As follows:

Interest rate rule: i_t=rho+alpha*pi_t^2+v_t, where i_t is interest rate, rho is constant, pi_t is inflation, v is a monetary shock. i_t’s steady value is rho. when I do simulation, i_t equals alpha*pi_t^2+v_t, that is not rho+alpha*pi_t^2+v_t. But I want to get the irf, where i_t =rho+alpha*pi_t^2+v_t, and it converges to rho, not zero. How can I do it? Many thanks!

Kind regards,

dieme