# Log linearization Help!

**URL:** <https://forum.dynare.org/t/log-linearization-help/4683>\
**Category:** Dynare help (legacy posts)\
**Created:** [10 May 2015 21:27 UTC](https://forum.dynare.org/t/log-linearization-help/4683 "2015-05-10T21:27:19Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![student23](https://forum.dynare.org/letter_avatar_proxy/v4/letter/s/3bc359/32.png) [@student23](https://forum.dynare.org/u/student23)\
**Post date:** [10 May 2015 21:27 UTC](https://forum.dynare.org/t/log-linearization-help/4683/1 "2015-05-10T21:27:19Z")

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Dear all,

I need some advice whether I correctly linearized the equation for capital evoluation with a multiplicative investment efficiancy shock:

K(t) = (1-delta)\*K(t-1) + i(t)\*I(t) where i(t) is an investment efficiency shock

I log linerized this equation arount the steady state and got the following: Khat = (1-delta)_Khat(-1) + delta_Ihat + ihat;

Am I correct in that?

Cheers,

Dirk

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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:** [11 May 2015 05:20 UTC](https://forum.dynare.org/t/log-linearization-help/4683/2 "2015-05-11T05:20:08Z")

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I think there is a delta missing in front of the efficiency shock. It is multiplicative with I and should thus have the same prefactor.