# Interpretation of y-axis in impulse response function graphs for VAR models

I read different papers which try to analyse the relationship between oil and macroeconomics with the help of a VAR model. The results are explained in graphics which show the impulse response functions. The question is now how to interpret the Y-axis. There is no graphic with an description of the Y-axis. I read in a learning book that it is in some cases only "how strong is the dependence of the variables " but in other cases it is the percentage of change in the variables. As example: 0.5 in period 1 = 0,5% change in variable x in period one / or only positive relationship.

• Right now the question is a bit unclear and thus hard to answer. Do you have an example of such a graph and can you show us the model specification? – Andy May 26 '15 at 11:55
• Yes sure. pic-upload.de/view-27157416/HELP.png.html Here are three examples. My opinion is, that number one and two only have got the statement if there is a positiv or negativ relationship. Number three could be interpret as percentage changes in the values. – Mark May 26 '15 at 13:49
• As example in number one: oil supply shock /oil quantity: is there an 1% depreciation in oil quanity? or is there only a niegative relationship? – Mark May 26 '15 at 13:52

The vertical axis is expressed in units of the $Y$ variable. The solid line is a point estimate for the amount $Y$ is expected to change following a unit impulse after the number of periods on the horizontal axis.