Hi everybody,

I am implementing the non-linear BGG model and I am confused about what’s happening to my technology shock…

Here is the idea:

The production function is:

` y = ((techno*l)^(1-alpha))*(k^(alpha)); `

where the variable techno is defined as:

` (techno/technobar) - ((techno(-1)/technobar)^rhoTechno)*exp(eps_techno); `

with technobar=1 and rhoTechno=0.95

in initval, I specified:

`techno = technobar;`

and in shocks:

```
shocks;
var eps_techno = 0.1^2;
end;
```

And, it seems that the shock has no impact on the dynamics (variance decomposition = 0 and IRF are not plotted).

I don’t see the problem… The .mod file is enclosed.

Thanks a lot!

model_FA.mod (5.77 KB)