This isn’t a dynare question, but I’m having problems figuring out exactly how log-linearizations happen in a lot of these papers. Looking specifically at Fernandez-Villaverde and Rubio-Ramirez (2006), I’m not sure how they get to equation (5) on page 28. See the attached PDF for more details on my problem in understanding how exactly they do the log-linearization.
Thank you for your help.
log-linearization question.pdf (91.5 KB)