Dynare forums

Dear all,

Can we have a negative shock in simulation? How? Thanks in advance.

Kind regards,

Dave

Hi,

If you are in a deterministic setup, you can put the shocks that you want, positive or negative, in the shocks block.

If you are in a stochastic setup, Dynare by default compute IRFs for one positive standard deviation of each of the shocks. To get the result for one negative standard deviation, one easy solution is just to invert the sign of the given shock in all the equations. Another is to construct simulations by yourself, using the simult_.m function provided by Dynare.

Best,

Thank you, Sebastien. Dave