Issue with the correlation matrix

Stochastic simulations
1

Hi everyone,

I have a doubt with the correlation matrix when I simulate various versions of the model I am currently working on. The model seems to run (it provides the IRFS returning back to the SS), however the correlation matrix displays only +1 and -1 (i.e. every variable is always prefecly correlated with the others).

Since I am new to this models, I am trying to understand the meaning of this.

Is it correct or do you think there is some mistake I am not considering?

Thank you very much for the help
Have a nice day!

matrix_issue.mod (5.3 KB)

2

This seems to be caused by your model. If you check the IRFs, they are all exactly proportional to each other. That explains the perfect correlation.

3

Hi Professor, thank you very much for this answer.

So, if I understand correctly, there is no mistake here but they are just the dynamics implied by my model.
Am I right?

Thank you again,
Have a nice afternoon

4

Yes, unless there is a mistake in the model.

5

Dear Prof. jpfeifer, thank you very much for your answers! The model now works correctly