The RATS Software Forum

Dear Tom,

I am totally new to DSGE and I would need to simulate impulse responses from the structural model by Canova and Menz (2011) "Does money matter in shaping domestic business cycle? An international investigation" (Journal of Money, Credit and Banking). It is a standard New Keynesian model augmented by a money demand equation.Based on the example you posted for Lubik-Schorfeide JME (2007) paper, I tried and wrote the code here attached, but I am puzzled because RATS gives me no error, while not displaying any graph.

Sorry for the silly question, I really am not familiar with DSGE!

Thanks in advance for your help and patience.

Best,

Kobe

As you have it written, there aren't any shocks. You need to take the IDENTITY tags off the four equations that define the four shock variables:

frml eqn9 = epsa
frml eqn10 = epse
frml eqn11 = epsz
frml eqn12 = epsmp

Dear Tom,

thanks a lot for your quick reply. I dropped the (identity) statement and it perfectly works now!

Again, sorry for the silly question!

Best,

Kobe

TomDoan wrote:As you have it written, there aren't any shocks. You need to take the IDENTITY tags off the four equations that define the four shock variables:

frml eqn9 = epsa
frml eqn10 = epse
frml eqn11 = epsz
frml eqn12 = epsmp

Dear
How can i generate the inflation data through this case?
Thank you

You asked a similar question about a log-linearized DSGE, and the answer is quite similar---you use DLM with TYPE=SIMULATE. You just don't have to invert the log-linearization. An example is the following