Log-linear model to nonlinear model: trends and steady state issues


#1

Dear all,
I would like to start from this https://www.sciencedirect.com/science/article/pii/S0148619511000294 log-linearized model (which follows Goodfriend and McCallum (2007) in its baseline setting https://www.sciencedirect.com/science/article/abs/pii/S0304393207000608) and analyze how it changes when we consider the second/third-order-approximation version of it .
The log-linearized version gave me no problems, I wrote it down directly in Dynare using the steady state values provided by the paper as additive parameters. However, when I tried to write down the untrasformed FOCs and equations for the nonlinear version of the model I have issues with the steady state (most of residuals are different form 0), even if I use the same ss values provided by the paper.
I think that the problem may concern the shock trends I have in the model, but I might be wrong. Could anyone help me or give me a hint?

Thanks in advance, please tell me if you need codes.


#2

Did you obtain the appendix the authors are referencing? The paper also says you can ask for the code. At the current stage, it is hard to tell who did the mistake.


#3

Thank you for the answer. Yes I obtained the appendix and it seems not different from my mod file. Do you want me to upload it?


#4

Have you checked whether the given steady states solve the model equations? You should be able to check that using pencil and paper.