- What do you mean? Percentage deviations are unitless and have an easy interpretation. That’s often not the case for levels, which depend on the units/scaling. For that reason, logs are typically used.
- Again, don’t do a full exp()-substitution. Append auxiliary variables. See Question about understanding irfs in dynare . It will make your life a lot easier
- If monetary neutrality holds in the flex-price model, then whether you include the shock or not does not matter. That being said, leaving it out is a lot more common.