Weird IRFs are right ?


#1

Dear all,
I built a DSGE model containing financial accelerator. But the impulse response figures are weird.I don’t know whether these IRFs are right. Can someone help me?bankH.mod (5.7 KB)
TECHNOLOGY


#2

Hi
What exactly do you find weird with these IRFs?
Reuben


#3

Reuben,apologies for what may be an elementary question: I’m a beginner for DSGE and dynare. I don’t know whether I’m doing the right thing.
In my understanding, does impulse response should return to steady state and then stabilize at steady state? In my IRFs, for example yh, Why it does not return to zero and goes down zero?
I’m sorry to ask such a question. May I can ask my code is right? I’m not sure whether the steady state calculation is correct.


#4

40 periods is not enough for IRFs to go to 0 in realistically calibrated models. You need to use more periods and will then see that the IRFs go to 0 (unless there is a unit root)


#5

I had a quick look to your code and it seems correct. Nevertheless, the best way to check if your steady state is correct (after you have checked you math first) is to code the non-linear verion of your model and provide dynare with the steady state file and see if it solves.


#6

p.gelain,thank you for your advice. I will try it.