Could I ask you a question on how to deal with trade balance in model?
If trade balance is **linearized **while all other variables are log-linearized, should I do like attached pdf? (If so, trade balance data directly matches model trade balance variable? but we do not know steady state of stationary out…).
What you should probably do is use the trade balance to GDP ratio. Both in your model and in the data, the ratio of net exports to GDP is measured as percent of GDP. Therefore, these objects should perfectly coincide and be stationary.