Flat IRFS
Posted: Tue Apr 04, 2017 9:58 amGood morning.
- I have written a quite cumbersome two sectors models in open economy (about 100 equations, most of which are dealing with sector prices and cross-sectorial demand, though hard to simplify).
- It is linear, I computed by hand the log-linearisation of the theoretical model around the steady state.
- When I run the identification command, I get no errors: "All parameters are identified in the model (rank of H); All parameters are identified by J moments (rank of J)"
- My IRFs are however flat. It seems that the model stays blocked at the steady state (I get the famous "All endogenous are constant..." message).
- My guess would be that my shocks may not be well specified, but I do not understand why. It seems to me that the linearity might be a problem. Sorry for it looks like a silly issue but I don't understand it.
Would anyone be able to assist?
Thank you so much in advance.
Best regards,
Paul Cahu
- I have written a quite cumbersome two sectors models in open economy (about 100 equations, most of which are dealing with sector prices and cross-sectorial demand, though hard to simplify).
- It is linear, I computed by hand the log-linearisation of the theoretical model around the steady state.
- When I run the identification command, I get no errors: "All parameters are identified in the model (rank of H); All parameters are identified by J moments (rank of J)"
- My IRFs are however flat. It seems that the model stays blocked at the steady state (I get the famous "All endogenous are constant..." message).
- My guess would be that my shocks may not be well specified, but I do not understand why. It seems to me that the linearity might be a problem. Sorry for it looks like a silly issue but I don't understand it.
Would anyone be able to assist?
Thank you so much in advance.
Best regards,
Paul Cahu