Hi There!,
Attached is a mod file. Can some one please tell me if something is wrong with my monetary policy specification in this file. Monetary policy shock does not seem to affecting the policy interest rate here.
slov_jul5_1420.mod (8.3 KB)
Because epsm does not enter any equation.
Even if it enters, it does not affect the interest rate. Any ways, the answer is it requires an adjustment in one of the parameters in the epsm equation.