rbc.mod

// RBC level
var Y C N W R I K A;
varexo e;

// params
parameters alpha beta sigma phi delta rhoa theta;
alpha = 0.35;
beta = 0.98;
sigma = 2;
phi = 1.5;
delta = 0.025;
rhoa = 0.95;
theta = 1;

// model block
model;
#Ass = 1;
//1-Consumption-labor supply
(C^sigma) * (theta * N^phi) = W;
//2-Euler equation
(C(+1)/C)^sigma = beta * (R(+1) + 1 - delta);
//3-Law of motion of capital
K = (1-delta)*K(-1) + I;
//4-production function
Y = A * K(-1)^alpha * N^(1-alpha);
//5-demand for capital
K(-1) = alpha * Y/R;
//6-demand for labor
N = (1-alpha) * Y/W;
//7-Equilibrium condition
Y = C + I;
//8-Productivity shock
A = exp( (1-rhoa)*log(Ass) + rhoa*log(A(-1)) + e);
end;

initval;
A = 1;
K = 10;
N = 0.3;
C = 1;
I = 0.25;
Y = 1.25;
R = 0.04;
W = 1;
end;



steady(maxit=1000);
check;
model_diagnostics;
model_info;

shocks;
var e;
stderr 0.01;
end;

stoch_simul(order=1, irf=40, tex) Y C N W R I K A;