stationarity problem in log-linarized model

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stationarity problem in log-linarized model

Postby dilsat » Sun Jun 17, 2012 11:09 am

Hello guys, I am working with a DSGE model with Financial Accelerator. Although the rank condition is verified and I am taking impulse responses, those responses do not come back to steady state. It is saying that "All endogenous are constant or non stationary, not displaying correlations and auto-correlations". I have 5 transitory shocks in the system and the shocks hit the economy separately. What should I do the get rid of this problem?
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Re: stationarity problem in log-linarized model

Postby jpfeifer » Sat Jun 30, 2012 12:52 pm

This most probably means there is a bug in your model and you accidentally introduced a unit root.
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Johannes Pfeifer
University of Cologne
https://sites.google.com/site/pfeiferecon/
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