I believe that you are refering to the Impulse Response Function of variable ‘a’ following a one standard deviation shock on ‘e’
This curve is downward sloping and it is what we expect.
From its specification, variable ‘a’ has zero mean. What the IRF curve shows is that after an initial shock of 0.007 (stderr e), variable ‘a’ goes back to its mean of zero.
This is to be expected in a stationary model. If you expect to see a growing curve for ‘a’, you are thinking about a growth model, but it isn’t the model that you have written in Dynare.
Because growth models are nonstationary, it is easier to work with the stationarized version of such models. If you know the trend, you can always add it after the simulation of the stationary components of the variables.
Q1:
If I want to see permanent shock result, how can I write the code?
Q2:
If my another model has three shock, I write down the code below
shocks;
var epif; stderr 0.007;
var etheta; stderr 0.007;
var eif; stderr 0.007;
end;
stoch_simul(dr_algo=1,drop=200,order=1);
the numerical result mean all shock together affect my model.
Is it right?
Q1: to study a permanent shock
a) use a deterministic model with initval and endval (see the manual)
b) un permanent shock in stochastic model means that the exogenous process in integrated of order 1 (nonstationary). Write the stationarized version of the model, perform the simulation, then add back the nonstationary components to the results. If you are not familiar with the handling of nonstationary models, you probably need to ask for help at your local university.