Variables in Steady States

Steady state
2
  1. Yes, that understanding is correct. But there are more alternatives. See Question about understanding irfs in dynare - #4 by jpfeifer
  2. Only the manual linearization is feasible in that case. You need to clearly distinguish the steady states of the original level variables (which are generally non-zero) and the ones of the deviations from steady state (which are 0). Only the manual linearization may not require the steady state of the original level variables.