Thank you Sir.
1.So am I correct in saying that, if I have 2nd order or 3rd order approximation for the mod file [order=2]. I still cannot do the mixing?
If I have that the NK equations are still written in log linearization in dynare mod file; But the Epstein Zin are written in levels. The equations are of different approximation order, but I can still get an approximation that is numerically more accurately than solely using linear equations in mod file, right? My logic is that some equations in 2nd order and some in 1st order, is closer to truth than all equations in 1st order.
2.If it is theoretically forbidden to mix nonlinear with linear.
Can I keep all equations in log-linear form by log-linearizing Epstein Zin preference also, such as in the Uhlig tutorial?
sfb649.wiwi.hu-berlin.de/fedc/ev … SGE_v2.pdf
Does log linearizing Epstein Zin somehow take away some of the interesting dynamics of Epstein Zin preference?