Uhlig, Harald - Sonderforschungsbereich 649: Ökonomisches Risiko, … - 2007
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for some function v(·) and up to the intercept and scaling. For a log-
linear approximation, the derivatives of logv … here. This approach has the advantage of being
well-understood and imposing a tight discipline on the exercise.
To a log-linear … approximation,
epsilon1λ,t+1 = −˜ηepsilon1c,t+1 + ˜νepsilon1l,t+1(29)
Equation (28) therefore implies a quadratic equation in ˜η and …
