Linearization

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Linearization

Postby mohsen » Sat May 27, 2017 10:28 am

In your opinion, does the equation linearize? How?
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Re: Linearization

Postby jpfeifer » Sat May 27, 2017 4:17 pm

Every equation can be linearized if the involved functions are differentiable. Simply use a Taylor approximation. Without you providing context, it is impossible to tell where a complication might arise. It seems you have a problem with variances.
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Re: Linearization

Postby mohsen » Mon Jun 05, 2017 9:52 pm

I did the part of linearization, right? And I have problems with linearization of sentences involving variance and exp , Can you help?
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Re: Linearization

Postby jpfeifer » Tue Jun 06, 2017 6:34 am

You still did not provide any context, just some math. Nobody knows what the variances are. Are they first or second order terms appearing in the equations, i.e. are the independent variables arising in the model, or are they the variances of other objects appearing in the model?
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Re: Linearization

Postby mohsen » Wed Jun 07, 2017 10:28 pm

I was prepared a primary content, think that will be useful.
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Re: Linearization

Postby jpfeifer » Thu Jun 08, 2017 6:31 am

If I understand you correctly, you want to use the lognormal trick to approximate around a kind of stochastic steady state. That cannot be easily done in Dynare. Usually the proper way would be to enter the model in nonlinear form and then let Dynare do a higher order approximation.
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