Questions about financial accelerator

[jpfeifer]

That is hard to tell. Does the model work as expected without the financial accelerator? Also, my reply at

Wired IRFs about financial accelerator shut off

This is one of the questions that is impossible to answer. Nobody except for you knows how the model is supposed to work. So you need to find out what is going on in it. What causes investment to drop? You should try to investigate the factors that drive investment like interest rates, risk premia, and capital prices. Maybe something strange shows up.

applies here, just with an opposite sign.