# Log-linearisation of the aggregate price

**URL:** <https://forum.dynare.org/t/log-linearisation-of-the-aggregate-price/10788>\
**Category:** General DSGE Modeling\
**Created:** [25 September 2017 14:21 UTC](https://forum.dynare.org/t/log-linearisation-of-the-aggregate-price/10788 "2017-09-25T14:21:51Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![Sherry](https://forum.dynare.org/user_avatar/forum.dynare.org/sherry/32/5377_2.png) [@Sherry](https://forum.dynare.org/u/Sherry)\
**Post date:** [25 September 2017 14:21 UTC](https://forum.dynare.org/t/log-linearisation-of-the-aggregate-price/10788/1 "2017-09-25T14:21:51Z")

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Hello everyone!  
I construct a DSGE model which have two different products, the prices of the two products are p1t and p2t respectively, so the aggregate price is ![Pt](https://forum.dynare.org/uploads/default/original/2X/7/7953d3b86c45d031b8008884eee7a8dc3759e340.png), when I log-linearize the aggregate price Pt, I get the formula as follows: ![Pt_log_linearisation](https://forum.dynare.org/uploads/default/original/2X/4/4ce432a744f7b80ae5b836ff769354dd7930e551.png). However when I read the other’s paper, I find their log-linearisation of aggregate price is different from mine, their log\_linearisation formula is ![Pt_log_linearisation2](https://forum.dynare.org/uploads/default/original/2X/b/bff92ab0240a4794b2c982ba16c6c995137aba01.png)  
I am a little confused about the log-linearisation of aggragate price, are the three prices p, p1, p2 equal when they are in equilibrium? but I can’t get the conslusion p=p1=p2 when solving the steady state of the model. Could you explain it to me?  
Thank you !

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**Author:** ![jpfeifer](https://forum.dynare.org/user_avatar/forum.dynare.org/jpfeifer/32/5044_2.png) [@jpfeifer](https://forum.dynare.org/u/jpfeifer)\
**Post date:** [25 September 2017 15:58 UTC](https://forum.dynare.org/t/log-linearisation-of-the-aggregate-price/10788/2 "2017-09-25T15:58:31Z")

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In most models, sectors are symmetric (identical preferences and technology), making their prices equal.

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**Author:** ![Sherry](https://forum.dynare.org/user_avatar/forum.dynare.org/sherry/32/5377_2.png) [@Sherry](https://forum.dynare.org/u/Sherry)\
**Post date:** [26 September 2017 01:02 UTC](https://forum.dynare.org/t/log-linearisation-of-the-aggregate-price/10788/3 "2017-09-26T01:02:46Z")

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I got it, thank you for your explaining~:blush: