Basic question: Linearized model with big ratios

Hi, sorry for the basic question.

I am new to Dynare. The linearized version of the model I want to simulate has some equations with variables with big ratios (of non linearized variables), for example:

y= /frac{C}{Y} c_t+ /frac{I}{Y} i_t+ /frac{G}{Y} g_t

I just would like to know if the correct way to code this in Dynare is the following:

Is it correct to do this? If not, how should I deal with it?

No, that does not work this way. Y and y_t are different objects. Y is the steady state level of output, while y_t is the percentage deviation of output from its steady state, i.e.

Usually you need to compute the steady state values and define them as parameters. Have a look at Pfeifer(2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models” There you can find an example.