Hello, I am trying to estimate a DSGE model and have a general question about the steady state values of variables in a log-linearised model. For example the equation:
has the following log-linearised representation:
where C and D are the steady state values and yt, ct and dt are the deviations from the steady state. So what can I use for these steady state values? Should I estimate them, too? Or is there any other way to find out the steady state values and set them as fixed parameter in the second step?