Dear Professor:

Does the variance of the variable stored in “oo_. var” reflect the volatility of the variable from being impacted to returning to steady state?

Furthermore, is the variance of the variable in steady-state always 0?

Think you!

Dear Professor:

Does the variance of the variable stored in “oo_. var” reflect the volatility of the variable from being impacted to returning to steady state?

Furthermore, is the variance of the variable in steady-state always 0?

Think you!

`oo_.var`

stores the unconditional variance, i.e. the average variance if the economy is hit forever by shocks.

Thanks for your reply！

If the resilience of variable A is defined from the two aspects of “initial fluctuation after shock” and “speed of return to steady state”, that is, the smaller the initial fluctuation of variable A caused by shock and the faster A returns to steady state, the better the resilience of variable A will be.

So can the variance of A in oo_. var be used to approximate the resilience of A？

Thanks again!

If that is your definition of resilience, then the answer should be yes. Both the initial shock size and the persistence are captured by the unconditional variance.

Thank you again!