Hi,
I am working on a two country model with endogenous capacity utilization and two types of technology shocks with spill-over effects. The production function is similar to the one in “Investiment, Capacity Utilization and the Real Business Cycle” by GHH(1986) where depreciation rate is a function of the capacity utilization. I take first order conditions, compute the steady state analytically and write euler-equations on dynare. However, even though I can get the codes running am not able to get the impulse response functions. There is no error message either. Is there any complex root problem? DO I need to detrend the production function by capacity utilization? PLEASE HELP!!!(I have attached the file)
ex35.mod (2.47 KB)