Problem in Linear Model

General DSGE Modeling
1

Hi, I have a non-linear model. I have log linearized all the equations except the exogenous shock, which is an AR(1) shock to variable u^b_t in the non-linear model. I have inserted the two following equations in Dynare:

u_b= (1-rho_b)+\rho_b*u_b(-1)+\sigma_b*e_b;
#\hat{u}_b=log(u_b);

I have the following error for the second equation (#3):

ERROR: If the model is declared linear the second derivatives must be equal to zero.
The following equations had non-zero second derivatives:
* Eq # 3

I wanted to know how I should linearize the shock equation or solve this error in another way.
Is there any way that I can have a nonlinear equation in a linear model?

2

ub is already linear. There is nothing to log-linearize here.

3

the Problem is with \hat u _b

4

Yes, indeed. What is the point of even having it?

5

Actually \hat u_t is appeared in the other log-linearized equations and not u_t.
This is while the AR shock is to u_t.

6

Then your loglinearization is wrong. There cannot be a log appearing after you linearized