Two Pitfalls of Linearization Methods
指出线性化方法使用不当的两个陷阱：先线性化约束再推导最优性条件会导致一阶条件错误；即使一阶行为正确，用于福利分析也可能出错。适合关注经济模型数值求解的研究者。
This paper illustrates two types of pitfalls when linearization methods are improperly applied. First, if we linearize the constraints before deriving the optimality conditions, the derived conditions are not correct up to first order. Second, even when we obtain the behavior of the economy that is correct to the first order, applying this behavior to welfare implications may lead to incorrect results. We also review different ways to avoid those pitfalls.