I am simulating a ‘pre-announced favorable shock in the future’ with the following code
var eB; periods 1, 2, 3, 4, 5; values 0.5, 0.62, 0.73, 0.84, 0.95;
simul(periods=20); give different dynamics. Below is the response of variable S to the shock which is like the opposite of the other. Am I missing something, or why should the number of simulation periods matter given that it changes the entire propagation mechanism of the shock.
How do dynare users choose which period to use? Or
simul(periods=5); should be the appropriate accompanying command.