Dear Prof Pfeifer,
Thank you so much! Indeed, I was able to see the error after updating to Dynare 4.6. I have one last clarification question. My impulse responses are slightly off the scales than the original paper, unless I shock the system using a very high value such as:
var epsilona = 1;
Compared to examples in your 2013 (specifying observation equation) document, setting this value seems too high to be true. Can the reason be some of the missing exp()s in my equations? Unfortunately, the moment I try exp()'ing all my endogenous variables, I start to get residuals greater than zero. I would be so grateful if you have any insight on this.
With many thanks,
RBCSIMS_steadystate.m (2.0 KB) RBCSIMS.mod (2.5 KB)