Is wavelet a Nonlinear transform, or Not?
specifically, continuous wavelet transform with morlet function.
I am studying behavior of a dynamic system, and it has nonlinear behaviour. can I employ wavelet transform?
A transform being linear has very little to do with its ability to analyze linear or nonlinear systems.
The wavelet transform $W[s(t)]$ of a signal $s(t)$ is linear because $$W[a s_1(t) + b s_2(t)]=a W[s_1(t)]+b W[s_2(t)]$$ for real or complex $a$ and $b$.
The signal you're analyzing is just a signal, it has no concept of linearity. However, if you try to come to conclusions about system properties of a nonlinear system, then you cannot break the analysis down to just a set of base signals to understand the system. In the worst case you would have to look at every possible intput/output pair. Often this can be simplified using known system properties like symmetries (i.e. time invariance).