Dear, I am new to Dynare. Is it true that we need to take exponential for all variables in order to express them in non-linear form? For example, Y = C + I. Do I need to express it as exp(Y)= exp© + exp(I) in dynare for it to recognise that it is in levels instead of log-linearised form? Or I only…

Hello Vannak, it is not true that you have to do that in order to type a non-linear model into dynare. It is possible to enter equations in both ways you described. Dynare actually calculates a linearization of the model-equations that you type in. What follows is that if you give it the equation …

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Non-Linear Model

General DSGE Modeling

jpfeifer 8 May 2020 09:36 3

See also

Question about understanding irfs in dynare Stochastic simulations

To be more precise: it depends on how the variables in your model are measured. As @stepan-a says, Dynare conducts a linearization. If you for example have a nonlinear model and your model variable is simply the level of output, the IRF will measure the difference between the variable and its steady state (or its mean at higher order). This is the case with https://github.com/DynareTeam/dynare/blob/master/examples/example1.mod In contrast, if your model variable already measures percentage…

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