State variables don't look like state variables

Stochastic simulations
1

Hi all,

I’m trying to build a model with two regions. Within each region, the local government accumulate nontradable public stock Kg. Ig denotes public investment.

I want to see the responses after a positive technology shock in region 2. However, the responses of Kg1 and Kg2 do not look like state variables. Kg2 increases sharply immediately after the shock, and then decreases to the steady state. In my view, a typical state variable should response slowly to the shock, which leads do an inverse-U shaped response. And the responses of Ig1 and Ig2 are even more strange.

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Is there any clue how I can fix this?

Best,
Fuyang

3

Dynare displays the IRF for the variable chosen in the currrent period. So what you see is Kg1 at the end of the current period after Ig1 has been added as per

4

Thanks Professor.
But the shape of Ig’s response is still strange, isn’t it?

5

Sorry, but I can’t judge that, because I don’t know the model.

6

Thank you so much!!!