The IRFs of my model do not seem to make sense, or I am simply not understanding them.

The model contains:

- CES production function
- Calvo pricing with inflation indexation
- Consumption habit formation
- Capital adjustment cost
- Taylor rule

I wrote it down in log-linearised form and simulate based on calibrated values from (Unalmis et al. 2012 - this is a stripped down version of their model).

My concern is about the IRFs:

- monetary policy shock leads to comovement of interest rate, output and inflation. Shouldn't inflation/output and interest rate move in opposite direction? Furthermore, investment increases!?
- marginal costs and return on capital move erratically following a TFP shock (e_ay)

My understanding is that this is not how such a model should behave and the second point tells me that there might be a timing issue. Capital is timed correctly if I am not mistaken.

Any hint as to why this model behaves in such a strange way is much appreciated.

Thanks a lot in advance,

Thore