IRF of Permanent Shocks in ++

[hamedgh]

Hi, I have two questions on working with non-stationary models with Dynare++. First, it seems that the de-trending commends which work with Dynare are not accepted by Dynare++. Is my understanding correct? (this is not a major issue since one can re-write the model directly into stationary form). But this leads to my second question. I have permanent productivity shocks in the model. The usual way is to include the shock into the growth rate, by which the model is normalized. For example, if log(Z_{t+1}/Z_{t}) = \mu + e1, we will use \mu+e1 as the normalizing factor. But then I can't plot the IRF because the shock dies in one period. Does anyone have any idea how to plot IRF for permanent shocks. Thank you.

[SébastienVillemot]

- indeed Dynare++ does not know how to automatically detrend variables

- I am not sure to understand your second question. You should easily get the IRF of the detrended model. If you want the IRF of the original non-stationary model, then you have to program a little bit: compute the detrending factor at all dates, multiply the detrended IRFs by this factor, then plot the result

[hamedgh]

Thank you. Yes, I got to conclusion that I need some programming to re-normalize it, the way you explained, and it worked well.