Hi, everyone. I am a novice to DSGE. I am trying to build an open-economic NK model with bank. But I got weird results as the production (Y) always negatively react to positive technology shock (va). I tried to tune the parameters many times, but somehow I can’t get a regular pattern of IRF.
So as in my knowledge, I believe normally Y and technology A should move in the same direction, which is not the case here. I am quite confused and don’t know what went wrong in my model. Can someone help me out? Thank you!
Sorry prof. I uploaded the wrong file for computing the steady state. I replaced it with the right one. Could you please help me have a look. Many thanks! NG4.mod (2.9 KB) ss2.m (1.3 KB)
You should try to shut of features of the model to see where this comes from. For example, you have a complicated Taylor rule and capital adjustment costs that can be simplified.
Thank you Professor, your advice helps a lot!
So I slightly simplified the model and tuned the parameters and I got some weird oscillating IRF pattern like this.
I was wondering if these IRFs make sense? If it’s wrong, is it because that the some eigenvalues are too close to 1? I have also write an RBC model with bank and the results just seem very “stylized”, so I was wondering maybe it has something to do with the way that I introduce price stickness to the model?
Also, I spent a lot of time tuning the parameters and I found that the model is very delicate. The BK condition are not satisfied even when I just make a tiny change of some parameter. I am not sure is that normal for a DSGE model?
