in the attached code I am trying to compute impulse responses for a number of variables, including w, p and w/p. However, whilst the irf for w and p seem to suggest that the ratio should decrease upon impact (for the second shock in the model), the opposite is the case. I could not quite figure out why this is.
A little help would be much appreciated. Thank you very much in advance.
simple_model.mod (2.46 KB)