I am a beginner of the DSGE model. I was recently looking at Gertler’s (2011) paper and I wanted to emulate his model. So I want to start with a simple model, and I don’t have the commercial banking sector in my model. I want to see how the other variables of the model respond to the capital efficiency utilization shock. However, I find that under the shock, my capital stock starts from non-zero and gradually moves towards steady state. The change in the capital stock in Gertler, on the other hand, starts from zero. I don’t have Gertler’s (2011) code, so I can’t check it myself. I’m trying to figure out what’s causing this.
model3.mod (1.9 KB)
Do you have adjustment costs for capital/investment?