Dear Professor Pfeifer,
I’ve got some confusing problems on irf analysis. Would you please take a look? Thank you!
(1) The results of my model display the irf figures as bellow. I wonder why some of them have steep rise and rapidly steep decline(as like the left figure), and some have very strange fluctuation(as like the right figure). Is it normal, or they just imply the mistake of model setting ?
(2) I set a policy parameter Z in the model, and I wanna compare irfs of different policies under a certain shock e.g. TFP shock. What’s the difference between: 1) just change the value of Z under TFP shock 2) give Z a permanent shock and get mixed irfs with TFP shock ?
Which one is the right case?
(3) If I wanna get the irfs when Z=1 change to Z=2 smoothly between 10 years, how should I realize this ?
(4) Concerning the first-order condition of consumption with habbit formation, I have read two types in the paper:
1){{\left( c_{t}^{{}}-{{a}^{{}}}c_{t-1}^{{}} \right)}^{-1}}-\beta a{{E}_{t}}{{\left( c_{t+1}^{{}}-ac_{t}^{{}} \right)}^{-1}}=\lambda _{t}^{{}}
2){{\left( c_{t}^{{}}-{{a}^{{}}}c_{t-1}^{{}} \right)}^{-1}}=\lambda _{t}^{{}}
What might be the difference of these two types?
Thanks again for reading these tedious question, and sincerely looking forward to your reply!