I have a some clarifications regarding setting up the shock in DSGE:
- In Stochastic type of DSGE models a shock bloc as follows:
is a shock of magnitude 0.2 in the periods 1000:1002 and then 0.1 in period 1005 ?However, a shock in the following fashion:
var psi = sigma^2;
Is a shocks related to the variance of the variable, right?
- Suppose now I am interested in shocking the model first to induce recession per say and then shock it again using government expenditure/monetary policy response shocks e, then I write:
Am I right here or the two shocks must be in one bloc ?
Thanks a million for you help