Hi,
I am working on a model where I loglinearized the equations. One of the equations have both steady state and log linearized prices (‘P’). I am in the process of coding but I don’t know what value I should assign for prices.
Can anyone please assist me?
Thanks.
If you are talking about a New Keynesian model, you have to stationarize everything by getting rid of prices. Express everything either in relative prices or inflation rates.
Thanks for this information Jpfeifer.