No impulse response produced for some shocks

Stochastic simulations
1

Hello all,

I have a simple question. I am working with an NK model which I have supplemented with some borrowing constraints. When I run the below code -simulating a TFP shock- the model seems to be solved finely and the impulse responses are generated. However, when I simulate an interest rate shock, the impulse responses all of a sudden have very small values (with -e’s) and no graph is produced. The model before adding the borrowing constraints was working fine for both shocks.

I would appreciate if anyone has some insight on this.

With many thanks,

Themodel_wFF.mod (2.7 KB)

2

You can verify in the policy functions displayed that the shock you are considering does not affect any of the variables you are looking at. So this is not a surprise. You need to find out why that is the case.