Wired IRFs about financial accelerator shut off


#1

Dear all,
I built a DSGE model containing financial accelerator. Refer to Christensen and Dib (2008) and MMB US_CD08 code. When the financial accelerator factor is equal to 0(pssiH=0),meaning there is no financial accelerator effect.,the IRFs of technology shock looks right.pssiH%3D0 pssiH0.mod (5.8 KB)

When the financial accelerator factor is set to 0.05(pssiH=0.05) and 0.1(pssiH=0.1),the IRFs of technology shock looks not good.05 1 pssiH01.mod (5.8 KB)
pssiH01.mod (5.8 KB)

The IRFs of capital (kh) and investment (ii) are very strange. Under the impact of technology shocks, they should Increase ,not be reduced.
I am a beginner. I checked the model repeatedly and could not find any problems.Can someone help me? Thanks in advance.


#2

This is one of the questions that is impossible to answer. Nobody except for you knows how the model is supposed to work. So you need to find out what is going on in it. What causes investment to drop? You should try to investigate the factors that drive investment like interest rates, risk premia, and capital prices. Maybe something strange shows up.


Questions about financial accelerator