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Thread: Log-linearization around steady-state

  1. #1
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    Unhappy Log-linearization around steady-state

    Hi all,
    I have a problem with solving the following equation. I need to log-linearize it around the steady state so I can use it in DSGE model as a linear equation. However, every time I try to solve it, exponentials xi and phi are always there so, in the end, it's not a linear equation at all. Does anybody know how to solve it and what's the final equation?
    Thank you!

    equation_13.PNG

    * B_0, B_1, xi and phi are parameters
    * b above lambda and every m and u are not exponents, just labels
    Last edited by janka; 11-30-2018 at 04:13 PM.

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