Perfect foresight: jumps in the IRFs

Hi all,

I wonder what jumps in perfect foresight solution mean. I plot the simulated results in forms of the deviations from the initval (the initial steady state of my model). A few variables display jumps in period 2 specifically.

Looking forward to hear from you.

I am not sure what you mean. Many economic variables are forward-looking “jump variables” that will immediately react to any information about shocks.