Hello everyone,

I am trying to code the log-linearized equations of Peter Ireland’s Paper on Money’s role in the Monetary Business Cycle (2004).

But I keep getting this message (see below) about the 3rd log-linearized equation. I looked on the internet and apparently that means that the equation is not properly log-linearised. But having redone the log-linearisation, I still falls on the same equation.

Does someone know what is happening here?

Thanks for the help.

The message: ERROR: If the model is declared linear the second derivatives must be equal to zero.

The following equations have non-zero second derivatives:

* Eq # 3 [pi]

LogLin.mod (1.7 KB)