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Positive responses to uncertainty shocks
Posted:
Thu May 18, 2017 1:23 pmby zhanghuifd
Dear friends,
I've encountered a simple problem in a model that uncertainty shock has positive effects on macro variables in the short run(when I set "replic = 5000").
Does it certainly happen in a model without price stickiness or wage rigidity?
Thanks a lot!
Re: Positive responses to uncertainty shocks
Posted:
Mon May 22, 2017 4:54 pmby jpfeifer
In the long-run, GIRFs should show a zero effect of uncertainty shocks. In the short-run, you should see expansionary effects of uncertainty if you have flexible labor supply and no nominal rigidities.
Re: Positive responses to uncertainty shocks
Posted:
Thu May 25, 2017 2:30 amby zhanghuifd
Hi, professor, deeply thanks for your help!
Sorry, I made a mistake last thread. Right, I found the same results as literature without nominal rigidity using Basu's files about irfs. But whether there exits a phenomenon that output decreases while consumption increasing at the same time under the effects of uncertainty? May be that is unreasonable.
Re: Positive responses to uncertainty shocks
Posted:
Thu May 25, 2017 5:14 pmby jpfeifer
You may get something like this with very high investment adjustment costs as those are going to prevent precautionary savings.
Re: Positive responses to uncertainty shocks
Posted:
Fri May 26, 2017 12:23 amby zhanghuifd
Yes, I think you are right! Thanks for your help!!