I have the following issue here:
I’m interested in the irf (for an eps_pco shock) for the variable wage_prem (wage premium) which is defined as wH/wL, that is, the ratio between high (H) skilled wage rate and low (L) skilled wage rate. The reasonable thing that I was expecting to obtain is that
IRF.wage_prem = IRF.wH/IRF.wL
but this is not the case. In fact, Dynare spits that while the IRF for an eps_pco shock for wH and wL increase, wH increasing more than wL, the IRF for wage_prem goes down.
I can’t see where this is coming.
I appreciate any help!
pcu3_sim2.mod (3.9 KB)