Negative shock to productivity & capital always increases

Why despite the negative shock to productivity, capital always increases in my model?


Have I coded the investment equations correctly?

Of course, my other equations that have capital are slightly different from the standard models
withtaylorandspreadtimngvagheandorost.mod (4.9 KB)

Thank you in advance for your help

Please do not open up multiple questions regarding the same model, you have not even answered my question on your last post. You have a unit root in your model. If you increase the irf-length you see that capital never moves back to steady state.

Also, the response is tiny with 10^(-10). So something must be wrong.