Hi Professor Pfeifer and to all,
I’m working on a regional dsge model. Variables and parameters with the index f refer to the rest of the country. Without this index - to the current region. I have one question. IRF for all variables looks very strange and evidences about unit root although theoretic moments for all variables and estimation of parameters (mode_check) in Dynare 4.5.3 look normal.Сan cause in the model specification? I am attaching the files.
Thank you very much in advance.
Best,
Leonidregion.zip (3.8 KB)
Hard to tell. The IRFs clearly show oscillating behavior. This may come e.g. from the paramterization of the fiscal rules in your model. Problems like this one are very hard to debug. Have a look at whether there is anything unusual in the parametrization.
Thank you very much Professor. Your help meant a lot.
But I have question.
Can linearized and non-linearized (level) variables (with steady_state=0) be present in one equation?
Thank you very much in advance.
Best,
Leoni