Hi everyone!
I am a student in DSGE,I have a confusion of the log-linearizaton of a formular.
The fomulra is:
‘chi_B’ is a parameter, ‘e’ is nominal exchange rate, and ‘b’ is the bond holding by the home country which are obtained from foreign country.
The log-linearizaton in dynare code is:
Yhss * y_h = Chss * c_h + Ihss * i_h + gy * Yhss * e_g_h;
I feel confuse that why the adjustment cost is dropped in the dynare code?
Thank you very much for any advice, best wishes to you!