simulation

[Brigitte]

Dear dynare creators and users,

I have a loglinearized model in dynare. When I run model_diagnostics and check command, everything is fine ( no unit root). However, when I stoch_simul the system with a preference shock, I can see for the consumption of Ricardian HH zero mean but also zero variance in theoretical moments section. Moreover, dynare tells me, that this consumption is either nonstationary or constant. Given equation is in accordance with the literature. The IRF then seem weird. How this could happen? Thank you very much for your comments.

[jpfeifer]

Mod-file please.

[Brigitte]

Dear professor Pfeifer,

thank you very much. Here is the mod. file.

[jpfeifer]

You need to check your FOCs. If you look at the policy function of c_R you will see that it does not respond to most shocks.

Sidenote: it seems you are going for estimation. In this case, you are neglecting parameter dependence in your mod-file (search the forum)

[Brigitte]

I found the mistake. Thank you very much for your help and thank you for introducing me the parameter dependance, I will use it.

Best regards,
B.