🌍 Week 11 Homework — Feedback

Student: Sebastiano Bacchi Assignment: VAR Estimation and Identification

✅ Overall Assessment

Result: ✅ Pass

Solid submission with correct VAR implementation. The code correctly estimates the VAR parameters, identifies the structural shocks using Cholesky decomposition, and computes the Impulse Response Functions. The student also provides a good economic interpretation of the results.

🔍 Task-by-Task Check

Task Description Status Notes
1.1 Data Loading & Cleanup ✅ Correctly loads and cleans data
1.2 Data Transformation ✅ Correctly computes annualized growth rates
1.3 Construct Data Matrices ✅ Correct setup of LHS and RHS matrices
1.4 OLS Estimation ✅ Correct OLS estimation of the VAR
1.5 Extract A1 Matrix ✅ Correct extraction of the transition matrix
1.6 Residuals & Sigma ✅ Correct calculation of covariance matrix
1.7 Identification (Cholesky) ✅ Correct use of chol(Sigma, 'lower')
1.8 Compute IRFs ✅ Correct computation of IRFs for all shocks
1.9 Plot IRFs ✅ Generates a full grid of IRF plots
1.10 Save Figures ✅ Saves the figure correctly

📈 Technical Implementation

  • VAR Estimation: Correct implementation of the OLS estimator.
  • Identification: Correctly uses the Cholesky decomposition.
  • IRF Generation: Robust implementation that computes IRFs for all shocks and variables.
  • Plotting: Uses nested loops to create a 3x3 grid of IRFs, which is efficient and clean.

💬 Style & Clarity

  • Code Structure: Well-organized code with clear sections.
  • Comments: Good comments explaining the methodology.
  • Variable Naming: Clear and descriptive names.

📊 Visual Output Assessment

  • Plots: The 3x3 grid provides a comprehensive view of the system’s dynamics.
  • Labels: Axes and titles are correctly labeled.

✅ Suggestions for Improvement

  1. None: The code is very well written and structured.

🎯 Summary

Very good submission. The student not only implemented the required monetary policy shock analysis but also computed and plotted the full set of IRFs for the system. The interpretation of the “price puzzle” is correct.

Grade Level: ✅ Pass (10/10 tasks correct)