Sharp changes in IRFs

Dynare help (legacy posts)
1

Hi all,

I have a very general question about the shape of IRFs after doing a simulation (stochastic or deterministic). I was wondering what the reason would be for a very sharp change (such as a V shape) in a IRF plot! I would appreciate any help.

Thanks.

2

Low persistence/propagation paired with a large shock. In the period the shock hits, there is a big reaction, but it hardly affects the period when the shock is 0.