I 'm trying to replicate the web appendix for Corsetti and Mueller (2006), “Twin deficits: Squaring Theory, Evidence and Common Sence”, but the IRFs I produce are way different than the IRFs presented in the appendix. Could someone please help me figure out what I’m doing wrong?
Thank you very much in advance.
Corsetti and Muller (2006), Twin Deficits Squaring Theory, Evidence and Common Sense (Appendix).pdf (195 KB)
CM_2006_L_IM.mod (3.7 KB)