Basic question about inputting log linear equation on the model block

Hi I have a basic question.

Suppose I have a set of log linearized equations from Eggertsson et al. 2019.

Then I type the equations (as it is written) on the model block

For example to type equation (83) I type

Y = (chi*C_b_ss/Y_ss)*C_b + ((1-chi)*C_s_ss/Y_ss)*C_s

_ss represents variable’s steady state values.

So my question is, when I shock the system and I get a value for Y.

What does the value for Y represent? It represents log deviation from the steady state right?

Thank you

The \hat Y_t here is indeed a percentage deviation from steady state.

1 Like