Interpreting the Impulse Response Function
Posted: Fri May 15, 2015 10:00 am
Hi,
I am having trouble interpreting the impusle response function of how one logged differntiated variable affects another logged differentiated variable.
I have used Cholesky ordering and are interested in how a one s.d. shock in change in oil price affects the GDP growth rate of a country. (both variables logged + first differentiated)
Our results:
y axis shows a response of 0.011 --> Does this then imply that: one s.d. shock in change in oil price increases the growth rate with 1.1%?
I would really appreciate any answers you can give us! THANK YOU!! :D
I am having trouble interpreting the impusle response function of how one logged differntiated variable affects another logged differentiated variable.
I have used Cholesky ordering and are interested in how a one s.d. shock in change in oil price affects the GDP growth rate of a country. (both variables logged + first differentiated)
Our results:
y axis shows a response of 0.011 --> Does this then imply that: one s.d. shock in change in oil price increases the growth rate with 1.1%?
I would really appreciate any answers you can give us! THANK YOU!! :D