Dynare log-linear model: Non-zero steady state, observation equations, and trend removal issues

Steady state
1

Hi everyone,

I’m working with a log-linear DSGE modelfor Bayesian estimation. My model includes several observed variables (consumption growth, nominal interest rate, and Inflation), and I face some conceptual and technical challenges in handling:

data_CC = C - C(-1) + TRENDC;
data_IR = R + Rb（IRMEAN）;
data_DP = pi +pi_bar(DP MEAN);

My model is specified as log-linear, and all endogenous variables are defined in hat form . However, many of the steady state values in the output are not exactly zero. Could someone help me understand what might be causing this?

2

Linear equations can have constant terms. They need to be properly handled in a steady_state_model block. See e.g. DSGE_mod/Smets_Wouters_2007/Smets_Wouters_2007_45.mod at master · JohannesPfeifer/DSGE_mod · GitHub

3

Dear Professor ，

Thank you very much for your guidance regarding the steady-state handling of linear models.