Mix of equations in levels and log linearized form

[econmac]

Hi,

In my dynare code, all equations are in levels. However one equation is an infinite sum which I had to be written in log-linearized form recursively. I entered that equation in the following way for the variable say z , ln(z/zbar)=A*ln(z+1/zbar)+ ln (X/Xbar) where, A is a parameter and zbar and Xbar are steady state values for the variables z and X which I calculated by solving the model. Is this approach correct? Or do I need to log-linearize every equation in the model to make it consistent?

Thank You!

[matheus_silva92]

As far as I know, you must either work with all equations log-linearized or with them all in levels (so you must linearize the rest of your model or write this infinite sum in its level).

[jpfeifer]

No, you can combine linearized and nonlinear equations provided that i) you only use a first order approximation and ii) correctly link the levels and percentage deviations. If z is the level of a variable, then
zhat=log(z)-log(steady_state(z)).