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Hello,

We're two PhD students new to Dynare, but eager to learn.

We have a dynamic model that we have linearized using percent deviations from steady state.

We would like to input that model directly into dynare, instead of the non-linear version, due to simplifications we imposed by hand while linearizing.

The question is: How do we input a linear model in percent deviations from steady state into dynare? And what is the command to solve it?

Thanks so much.

martom wrote:
We have a dynamic model that we have linearized using percent deviations from steady state.

We would like to input that model directly into dynare, instead of the non-linear version, due to simplifications we imposed by hand while linearizing.

The question is: How do we input a linear model in percent deviations from steady state into dynare? And what is the command to solve it?

Thanks so much.

Dear Martom,

linear models are a particular case of nonlinear models. You just enter the linear equations in the model block. Your variables are really the percent deviations of the original variables to steady state and will be equal to zero at the steady state.

You should add the option 'linear' to the model instruction as Dynare can take advantage of knowing that the model is linear.

The model is solved with the stoch_simul instruction.

Best wishes

Michel