# Help in DSGE

I am a beginner using DSGEs and Dynare overall. I only began proper training in economics a few months ago.

I’ve been trying to simulate a 2 sector NK model for a while and I still get the error message saying that the steady state can’t be calculated. I entered the Taylor rule and Phillips curve in linear form while the other equations are not log linearised. Should that be a problem?

I would like to ask for a textbook or lecture notes recommendation which I can consult for the basics of DSGEs as I don’t fully understand the theory very well.

Also, I would like to learn about estimation but that goes beyond the scope of my course. I don’t know anything about Bayesian estimation. Any recommendation for introductory reading so I can self-learn?

I would really appreciate that.

Thanks.

If you only go to first order, combining loglinearized equations with nonlinear equations is possible (for higher orders, see [Can you mix log linearized equation with level equation?)). But you need to account for the fact that e.g. output in percentage deviations, y_hat, in linearized equation is a different variable than output in levels y as

``y_hat=log(y)-steady_state(y);``

Regarding references, you might want to look at
mitpress.mit.edu/books/economic-dynamics-discrete-time
skchugh.com/teachingmanuscript.html
Fernandez-Villaverde, Jesus and Dirk Krüger (2012). “Advanced macroeconomics - a text for
undergraduates”. Tech. rep. University of Pennsylvania.
Krüger, Dirk (2007). “Quantitative macroeconomics: an introduction”. Tech. rep. University of
Pennsylvania

Regarding estimation, the standard reference is An/Schorfheide (2006), but I would not recommend doing before a thorough training.

Hi jpfeifer! Dou you have the link to the reference “Fernandez-Villaverde, Jesus and Dirk Krüger (2012). “Advanced macroeconomics - a text for undergraduates”. Tech. rep. University of Pennsylvania”?

Thanks!

I sent you an email, but generally you can contact Dirk Krueger and ask him for the recent version as far as I know. It will be a book at some point.

Thank you very much!