Hi All,

I have done both variance decomposition and shock decomposition in dynare, however, i have the following questions.

- in my variance decomposition and shock decomposition, some observed variables’ variances are attributed to a variety of structural shocks, while several observed variables’ variances are attributed to only one single structural shock, for example, education is the observed variable, its variance is only influenced by human capital shock (100% in variance decomposition is attributed to human capital shock), while other variables such as gdp, consumption, their variances are influenced by a number of structural shocks, is there a potential problem about the variance decomposition for education? is this an indication of model misspecification of the dsge model?
- i find some structural shocks contribute to shock decomposition in large proportion but did not contribute variance decomposition or just a little,is this normal or does this also indicate model misspecification of the dsge model?

Thank you and looking forward to hearing from you.

Kind regards,

Jesse