Question about simulated trajectory

Perfect foresight simulations
1

Hi professor, I’m doing deterministic simulation using perfect foresight model,there is a permanent unexpected shock . the simulated trajectory of capital consumption and output are below:

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image1014×810 14.9 KB

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image998×818 14.3 KB

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image1014×832 12.3 KB

When I do not use dsample command, the output in the first period has a sharp decline, I wanna know how to interpret, is it normal? Can I just plot the trajectory from period 1 instead od 0. Thanks in advance!

2

That is hard to tell without seeing the codes. Period 0 provides the initial condition. If that was a steady state, then the drop of output in the first period is meaningful.

3

Thanks professor, I wanna ask does this condition mean the saddle path is not monotonous? Because in the first period the consumption jump to the new saddle path, and the it declines for a few periods, so it is capital.

4

It looks like the jump onto the saddle path is not monotonous. But I don’t know your model.

5

runner_perfect_foresight.m (3.6 KB)
perfect_foresight.mod (7.6 KB)
Thanks professor.There are the codes. Please help me. Thanks for your time!

6

The comp_omegabare.m is missing.

7

comp_omegabare.m (540 Bytes)
Sorry, this is the file.

8

I cannot reproduce the problem in cleaned up files:
perfect_foresight.mod (7.7 KB)
comp_omegabare.m (540 Bytes)
runner_perfect_foresight.m (3.6 KB)