Dear All, I have a question that I hope you can help me with. I am new to this literature, so this may be a dumb question. Is it acceptable to study a model in which only some equations are expressed in log-deviations, while others are not? In my case this would imply that some variables will be …

Partial Model Log-Linearization

jpfeifer 4 February 2019 13:38 2

See

Mix of equations in levels and log linearized form General DSGE Modeling

No, you can combine linearized and nonlinear equations provided that i) you only use a first order approximation and ii) correctly link the levels and percentage deviations. If z is the level of a variable, then zhat=log(z)-log(steady_state(z))

show post in topic

Home
Categories
Guidelines
Terms of Service
Privacy Policy

Powered by Discourse, best viewed with JavaScript enabled