Harmonic balance is a non-linear, frequency-domain, steady-state simulation. The voltage and current sources create discrete frequencies resulting in a spectrum of discrete frequencies at every node in the circuit. Linear circuit components are solely modeled in frequency domain. Non-linear components are modeled in time domain and Fourier-transformed before each solving step. The informations in this chapter are taken from [8] (chapter 3) which is a very nice and well-written publication on this topic.
The harmonic balance simulation is ideal for situations where transient simulation methods are problematic. These are: