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Hi, Dynare experts,

I've been a bit confused about a conceptual question. When we have only one shock to the model economy, what's the difference between the simulated time series generated from the model, and the impulse response to the shock? Also, when we generate the IRFs and simulated data, the units of these two figures seem to be largely different, why is that?

Thanks very much!

The IRF is the response of the economy to a one-time positive one standard deviation shock. The simulated series are the result of a random shock drawn from the shock distribution every period. Thus, in a sense the simulated series are the sum of many different IRFs derived from different shocks at different points in time.