I am trying to simulate a standard RBC model and I am trying to include a negative transitory shock to productivity, to see the reaction of consumption, capital intensity etc. The way I modeled shocks before, with Periods defining a certain time-frame and values setting the varaible below its steady state, however now doenst work, since my productivity variable u is not exogenous and follows an AR-1 process.
Can anyone point me in the right direction of how to model this? Any help would be greatly appreciated, and I want to thank everyone on this forum for their great ideas and help!
Have a nice day!
RBC.mod (938 Bytes)