Hi everyone,
I'm running my codes (attached) in Dynare with 1st order linear approximation, but I get very weird shaped IRFs that have lots of kinks, and some of them go back to steady states more than once. My suspicion is that I am not using dynare properly, but I couldn't figure out which part goes wrong. Could anyone point to the right direction for me?
Or would log-linearising them manually before running them in Dynare generate more sensible IRFs (smooth or hump-shaped)?
Thank you very much!