Taylor rule with trend inflation and growth

Dear all,

I am simulating a two period Taylor type of contracts model, with both price and wage rigidites, trend inflation and growth at the steady state. The economy is hitten by two shocks; a contractionary monetary shock via a taylor rule and a permanent technology shock. While the signs of IRFs are convincing, it seems that the model does not create that much of dynamic; the interest rate dies after 2 periods when its impact stays for longer time. The problem disappear if I consider a smoothing effect, but I am scared to hide some important problems by doing so.

My .mod file is attached.

Any suggestion or advice?
Thanks a lot,
fev08.mod (2.91 KB)