log-linearization
Posted: Wed Mar 07, 2012 12:44 pm
Dear all,
I have a question about the log-linearization method. I would like to linearize the capital adjustment cost which takes the following form: (phi/2((k_t+1/k_t)-1)^2).
My question is: knowing that this form takes 0 at the steady state, is it possible to linearize it around its deterministci steady state. If yes, what is the result?
Thank you in advance.
Best regards
I have a question about the log-linearization method. I would like to linearize the capital adjustment cost which takes the following form: (phi/2((k_t+1/k_t)-1)^2).
My question is: knowing that this form takes 0 at the steady state, is it possible to linearize it around its deterministci steady state. If yes, what is the result?
Thank you in advance.
Best regards