1var y c k m n R pi z u;
2varexo	e sigma;
3// sigma stands for phi in the eq 2.37 p.69
4
5parameters alphha betta delta gamm phi1 eta a b rho  phi2 Psi thetass;
6//phi1 stands for capital phi in eq.2.68 and 2.69
7//phi2 stands for lowercase phi in eq. 2.66
8
9alphha = 0.36;
10betta = 0.989;
11gamm = 0.5;
12delta = 0.019;
13phi1 = 2;
14phi2 = 0;
15eta = 1;
16a = 0.95;
17b = 2.56;
18rho = 0.95;
19Psi = 1.47630583;
20thetass = 1.0125;
21
22model;
23
24(a*exp(c)^(1-b)+(1-a)*exp(m)^(1-b))^((b-phi1)/(1-b))*a*exp(c)^(-b) = (a*exp(c)^(1-b)+(1-a)*exp(m)^(1-b))^((b-phi1)/(1-b))*(1-a)*exp(m)^(-b)+betta*(a*exp(c(+1))^(1-b)+(1-a)*exp(m(+1))^(1-b))^((b-phi1)/(1-b))*a*exp(c(+1))^(-b)/(1+pi(+1));
25
26Psi*(1-exp(n))^(-eta)/(a*exp(c)^(-b)*(a*exp(c)^(1-b) + (1-a)*exp(m)^(1-b))^((b-phi1)/(1-b))) = (1-alphha)*exp(y)/exp(n);
27
28(a*exp(c)^(1-b)+(1-a)*exp(m)^(1-b))^((b-phi1)/(1-b))*a*exp(c)^(-b) = betta*exp(R(+1))*(a*exp(c(+1))^(1-b)+(1-a)*exp(m(+1))^(1-b))^((b-phi1)/(1-b))*a*exp(c(+1))^(-b);
29
30exp(R) = alphha*exp(y)/exp(k(-1)) + 1-delta;
31
32exp(k) = (1-delta)*exp(k(-1))+exp(y)-exp(c);
33
34exp(y) = exp(z)*exp(k(-1))^alphha*exp(n)^(1-alphha);
35
36exp(m) = exp(m(-1))*(u+thetass)/(1+pi);
37
38z = rho*z(-1) + e;
39
40u = gamm*u(-1) + phi2*z(-1) + sigma;
41
42end;
43
44shocks;
45var e; stderr 0.007;
46var sigma;stderr 0.0089;
47end;
48
49
50steady;
51
52