I’m trying to replicate the model of the paper The general equilibrium effects of fiscal policy: Estimates for the euro area of Forni, Monteforte and Sessa as part for my thesis.
I’m having trouble modelling the log-linearised version of their model as the expressions include steady state values. The formulas for the steady state are given in the paper, but I’m confused how to model this.
Should I make a steady state block after the model block where I can refer to in the model block or should I compute the steady state values in the model block and simply declare them as new variables.
Any help would be much appreciated.
With kind regards,