I have been estimating a DSGE model using only a subset of the shocks, setting some shock st. deviations to zero. I noted that dynare produces impulse responses for even the inactive shocks! It must be noted that in the ‘inactive-shock triggered’ IRFs the deviations of the endogenous variables from steady-state are very very small, to the order of 10^-10. Have any of you experienced the same? And if so, what could be the explanation?
To prevent dealing with non-positive definite covariance matrices, Dynare adds a small number to the diagonal of the covariance matrix:
In most cases, no IRFs are displayed as IRFs are only printed for cases where the response exceeds
In your case, the IRFs seem to barely exceed this threshold, resulting in displayed graphs. But this is nothing to worry about.
Thanks, Johannes! I must thank you for your work on this website. It is fantastic.