Two region model when one representative firm has establishments in both regions

[jpfeifer]

Hi, this is not an error, but rather a warning. It comes from your model having a unit root. That explains why the effects are permanent. Maybe you have the same issue as in

Mulit capital economy with bonds

This is not a timing issue. Rather, it is the result of consumption smoothing. After a shock, bonds are aquired by one agent, who then consumes an annuity out of these bonds. Thus, the bond stock never goes back to steady state, leading to a permanent wealth effect. This is the reason for the unit root your are getting. This behavior is well known from the small open economy literature.