Below I’m sending an adaptation of this example code by Prof Pfeifer. I have two shocks (both unanticipated) and I’m trying to understand two very simple things.
i. When I only have a single shock (e_t), why is the output in the log_y_et vector not matching the y_IRFmodel025csolo output (row 15 for log_y_et)? (ps. I can confirm that both systems received the same shock by comparing row 11 to ttau_et. However, the same is not true for the outcome variables.)
ii. How can I generate a negative shock? I have tried different alternatives, yet I still have the problem of getting different values which confuses me a lot. Should I be changing signs in the .m file or in the shock_matrix line? (as both again are giving different numbers)
For instance, if I use
“shock_matrix(1,strmatch(‘et’,M_.exo_names,‘exact’)) = - 0.5”
I do not think this is really generating me a negative tax shock since output (again row 15 in y_IRFmodel025csolo) seems to respond negatively to a tax cut. In contrast, when I do the sign flip of the shock in the .m file without the use of shock_matrix, I get a negative tax shock increasing output, which sounds more right economically.
I appreciate any helps on this, thank you so much for your time and consideration.