# Question about US\_CD08 model

**URL:** <https://discourse.macromodelbase.com/t/question-about-us-cd08-model/56>\
**Category:** Uncategorized\
**Created:** [October 7, 2018, 10:40am UTC](https://discourse.macromodelbase.com/t/question-about-us-cd08-model/56 "2018-10-07T10:40:07Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![aibenaimer1](https://avatars.discourse-cdn.com/v4/letter/a/c89c15/32.png) [@aibenaimer1](https://discourse.macromodelbase.com/u/aibenaimer1)\
**Post date:** [October 7, 2018, 10:40am UTC](https://discourse.macromodelbase.com/t/question-about-us-cd08-model/56/1 "2018-10-07T10:40:07Z")

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Dear all ,  
I want to repeat paper ‘The financial accelerator in an estimated New Keynesian model’. When running the MMB database of US\_CD08 , I can get humped IRFS(like attachments picture) ![US_CD08](https://canada1.discourse-cdn.com/flex036/uploads/mmb/original/1X/3348a5817ea20acaa4d43c0df2bba968e0bd3e41.jpeg) .  
But when I rewrite US\_CD08 without changing any parameters and variables, why do I have to produce a hump-shaped IRFS?  
My question is when I want to try to repeat US\_CD08 code in separate code, why don’t I have similar IRFs?I didn’t change any parameters and variables.I am really puzzled.

> // Model: US\_CD08
> 
> // Created by Jens Kruk  
> // Last edited: 2010/09/07 by S. Schmidt
> 
> // Christensen, Ian and Ali Dib. 2008. “The financial accelerator in an estimated  
> // New Keynesian model,” Review of Economic Dynamics 11, pp. 155-178.
> 
> var lambda c b m e r h w y k a i cost z mu pi q x f n rp;
> 
> varexo e\_r u\_x u\_a u\_e u\_b ;
> 
> parameters  
> gamma alpha rho\_pi rho\_y rho\_mu delta chi beta phi psi nu  
> rho\_a rho\_e rho\_x rho\_b c1 m1 r1 h1 cy1 iy1 f1 z1 kn1 pi\_ss r\_ss xi\_ss f\_ss z\_ss  
> lambda\_c lambda\_m k\_\_y c\_\_y w\_h\_y h\_ss i\_\_y b\_ss k\_\_n S;
> 
> gamma=0.0598;  
> alpha=0.3384;  
> rho\_pi=1.4059;  
> rho\_y=0.2947;  
> rho\_mu=0.6532;  
> delta=0.025;  
> b\_ss=0.062;  
> chi=0.5882;  
> beta=0.9928;  
> eta=1.315;  
> phi=0.7418;  
> psi=0.042; // 0 in the NoFa  
> nu=0.9728;  
> rho\_a=0.7625;  
> rho\_e=0.6156;  
> rho\_x=0.6562;  
> rho\_b=0.7206;  
> pi\_ss=1.0079;  
> xi\_ss=5/6;  
> k\_\_n=2;
> 
> S=1.0075; // Jens Kruk replicated the standard deviations of CD more accurately when setting S=1. However, S should be 1.0075 (see p.163 in DC).
> 
> r\_ss=pi\_ss/beta;  
> f\_ss=(S_r\_ss)/pi\_ss;  
> z\_ss=f\_ss+ delta-1;  
> lambda\_c=(1+b\_ss_(pi\_ss/(pi\_ss-beta))^(gamma-1))^(-1);  
> lambda\_m=lambda\_c_b\_ss_(pi\_ss/(pi\_ss-beta))^(gamma);  
> k\_\_y=alpha\*(xi\_ss/z\_ss);  
> c\_\_y=1-delta\*(k\_\_y);  
> w\_h\_y=(1-alpha)_lambda\_c_xi\_ss/(c\_\_y);  
> h\_ss=w\_h\_y/(eta+w\_h\_y);  
> i\_\_y=1-c\_\_y;
> 
> model(linear);
> 
> ((1-gamma)_lambda\_c-1)c=gammalambda+lambda\_m_((r\_ss-1)/r\_ss)\*(b+(gamma-1)_m)-gamma_e;
> 
> (gamma\*r)/(r\_ss-1)=b+c-m;
> 
> h\_ss_h=(1-h\_ss)_(w+lambda);
> 
> lambda(+1)=lambda-r+pi(+1);
> 
> y=alpha\*k(-1)+(1-alpha)\*h+(1-alpha)\*a;
> 
> y=c\_\_y_c+i\_\_y_i;
> 
> w=y+cost-h;
> 
> z=y+cost-k(-1);
> 
> mu=m-m(-1)+pi;
> 
> r=rho\_pi_pi+rho\_mu_mu+rho\_y\*y+e\_r;
> 
> f=(z\_ss/f\_ss)_z+(1-delta)/f\_ss_q-q(-1);
> 
> q=chi\*(i-k(-1))-x;//q=chi_delta_(i-k(-1))-x;
> 
> pi=beta_pi(+1)+((1-beta_phi)\*(1-phi)/phi)\*cost;
> 
> k=delta_i+delta_x+(1-delta)\*k(-1);
> 
> f(+1)=r-pi(+1)+psi\*(q+k-n);
> 
> rp=psi\*(q+k-n);  
> n/(nu_f\_ss)=k\_\_n_((z\_ss/f\_ss)_z+(1-delta)/f\_ss_q-q(-1))-(k\_\_n-1)_(r(-1)-pi)-psi_(k\_\_n-1)_(k(-1)+q(-1))+(psi_(k\_\_n-1)+1)\*n(-1);
> 
> x=rho\_x_x(-1)+u\_x;  
> a=rho\_a_a(-1)+u\_a;  
> e=rho\_e_e(-1)+u\_e;  
> b=rho\_b_b(-1)+u\_b;
> 
> end;
> 
> shocks;  
> var e\_r ; stderr 0.0058 ;  
> //var u\_e ; stderr 0.0073 ;  
> //var u\_b ; stderr 0.0103 ;  
> //var u\_a ; stderr 0.0096 ;  
> //var u\_x ; stderr 0.0331 ;  
> end;
> 
> stoch\_simul(irf=20);

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**Author:** ![fstrobel](https://avatars.discourse-cdn.com/v4/letter/f/b3f665/32.png) [@fstrobel](https://discourse.macromodelbase.com/u/fstrobel)\
**Post date:** [October 9, 2018, 11:24am UTC](https://discourse.macromodelbase.com/t/question-about-us-cd08-model/56/2 "2018-10-09T11:24:46Z")

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Dear aibenaimer1,

in the simulation with the MMB, depicted in the graphs above, you chose to simulate the model with the monetary policy rule as described by Taylor (1993) (to see the exact specifications of the monetary policy rules in the MMB either click the button “Monetary Policy Rules description pdf” of the Graphical User Interface of the MMB, or directly open the MMB\_MPRule\_description.pdf in the folder MMB\_Options).

The code below contains the monetary policy rule that Christensen and Dib included in their model (i.e. different feedback coefficients, reaction of interest rate to money growth). The difference in the interest rate rules causes the IRFs to look different.

For most of the models in the MMB, we allow to simulate the model with the model-specific policy rule as well. In the case of US\_CD08, however, the MMB cannot accomodate the reaction to money growth in the interest rate rule.

I hope, this answers your question.  
Best regards,  
Felix