simplemodel.mod (1.6 KB)Hi, every one
I just write a simple version of CEE2005, no habit or wage rigidity. But the IRF cannot converge in short run, it may converge after about 2000 periods. Another problem is that given an positive shock to money growth rate rule, while the nominal interest rate rises. But I hope to generate decreasing one. I post the mod, I just log-linearize the equations by hand, I hope someone can help solve my problems. I am really poor at solving models.
Thanks in advance!
Are you sure that there really is a problem? Your model seems to feature massive endogenous persistence. One of the eigenvalues is 0.9982. This explains the persistent IRFs. It may have to do with your parameter values.
Thank you, jpfeifer, I also doubt the parameters’ setting may be where the problem lies. I will check it.