Steady state & IRF

Dear Forums,

Actually I calculate the model under three cases, best allocation (social planner), decentralized economy under real rigidity, decentalized economy under nominal rigidity. if I understand well, the difference in the code between the social planner and decentralized economy is the job creation equation and the others is constant. and the difference between the decentralized economy under nominal rigidity and real rigidity (Non-linear Phillips Curve that i derived through rotemberg price ). but actually when I run the code and get the IRF, something is weird as the sizes of the IRF and the sizes of the volatilities of the endogenous variables are ridiculously small.

Could you please help me where is the problem?
Thanks much
Sticky_1.mod (4.74 KB)
Flexible_1.mod (4.48 KB)

What exactly do you mean? Consumption move by about 1 percent in both files.

I mean the IRF doesn’t make sense as the employment (N) and labor tightness ration (x) is negative, i think it’s should be positive when I do productivity shock. also the steady state, it’s correct? or something wrong?


Could anyone help me, as the variable market tightness is negative, I think something wrong in steady state, but i couldn’t find this mistake?


As your model runs, the steady state cannot be wrong. It is consistent with your FOCs. Thus, your model equations need to be wrong.

Thanks for your replying. Could I ask please, if I want to calculate welfare gap between the case of flexible price and social planner under two different distortions (Markup is not equal 1 and Hosios Condition isn’t satisfied). can you give me a hint what’s the starting point or some examples.

Thanks a lot

Can anyone give me one example?

Thanks a lot


I attach the mod.file, I have two questions:
1/i have inf for some variables (MC, x and N).
2/IRF doesn’t include (x and N).

Thanks a lot
TRY_FLexible_1.mod (5.47 KB)

I am not working in this area, so I cannot provide an example.

  1. You are using simulated moments. As the displayed moments show, MC, x and N are constant. Thus, autocorrelations are not well defined.
  2. Dynare does not display variables where IRFs are smaller than 1e-6 (4.4.3) or options_.impulse_responses.plot_threshold (later versions). As these variables are constant, they will not be displayed

Thanks for replying, so how i can solve this problem ?

Simply, I used the same method from one of your example, to set the labor or (employment) and calculate the other variables. how i can manage with autocorrleation problem as i know it’s not well defined.
RBC_news_shock_model.mod (6.52 KB)

also If I have utility function: Util = (Log©)-(chi/(1+Phi))(N^(1+Phi)); when I put Log © in the code, i have (-ve) value for the utility and welfare at SS, but when I put Util = (1/C))-(chi/(1+Phi))(N^(1+Phi)); I have (+ve) value for utility and welfare but disappear from IRF. I don’t know what’s the correct one.


Also, When I have two models, one with flexible price and the second one with sticky price (Rotemberg sticky price), the welfare value is the same under two cases.

is this make sense? or i am going wrong?


I am Sorry to ask a lot, I solve the problems which I wrote above. I have two question:

  • For calculation welfare cost of business cycle (%), after that, I should compare the mean of welfare under (APROXIMATED THEORETICAL MOMENTS (HP filter, lambda = 1600) with (steady state variable) or I am wrong?
  • If I want to change two parameters with two variables in Same IRF, without doing loop by matlab? it’s possible by DYNARE?


  • Usually, welfare comparisons are reported in terms of consumption equivalents. But by comparing the mean to the steady state is also one way to do it. However, there is absolutely no reason to HP filter welfare.
  • Please be more precise what you are trying to do.