No impulse response produced for some shocks

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)

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.