Interpreting loglinear command results

[Jacob02]

Hey guys,

I have created a RBC model, where I use the command loglinear when doing my simulations. I am now confused about how to interpret different moments. When calculating the standard deviation of lets say output (Y) i get 0.07. Is that interpreteted as my model having a standard deviation of 7% deviation from the steady state? ty for helping

BA_model_v3.mod (2.8 KB)

[eisamabodian]

In dynare reference manual for Dynare 6.0 in page 79 you can see the loglinear option in \texttt {stoch_simul() } command.

\texttt{stoch_simul() } will display the moments, decision rules, and impulse responses for the log-linearized
variables. The decision rules saved in \texttt {oo_.dr } and the simulated variables will also be the ones for the
log-linear variables.

[stepan-a]

Hi,

Yes, log-linearisation gives you percentage deviations from the steady state (for the moments and IRFs). See the discussion about the different ways to achieve this in Dynare (the loglinear option is not always possible or desirable):

Linearisation vs Log-linearisation

Dear all, Sorry for the stupid question. When we solve our model in dynare, is the linearisation of a first order Taylor approximation the same as we would log-linearise the model by hand? My question is based on Johannes’ reply in this post, where Johannes says: But the model you are referring to, the Smets/Wouters 2007 model, was linearized, i.e. a first order Taylor approximation was performed. As far as I remember is the SW model log-linearised. Many thanks for your help! Robert

Best,
Stéphane

[Jacob02]

Thanks, for the quick reply and sorry I could not find that answer on my own. I just had to be sure, since my model produces some unrealistic big volatility in output. Have a nice day