Macroeconomics

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% [1] Declare variables and parameters

var u v h s w q theta We Wu J c z m p;
varexo epsilon_s epsilon_p A B epsilon sigma E V;
parameters beta mu alpha rho gamma uss vss hss s_ss wss qss thetass Wess Wuss Jss css zss mss pss;



% [2] Declare variables and parameters

beta=0.5;
alpha=0.5;
rho=0.988;
s=0.0591;
u=0.0567;
p=1.00;
z=0.4;
h=0.98;
v=0.06;
w=0.96;
theta=0.98/0.9;
V=0
A=[s(+1); p(+1)];
B=[s; p];
epsilon= [epsilon_s(+1); epsilon_p(+1)];
E=epsilon';
gamma= [0.4877 -0.9690; -0.0097 0.8676];
gamma_11=gamma(1,1)
gamma_12=gamma(1,2)
gamma_22=gamma(2,2)
sigma=epsilon*E;
sigma=[0.0074 -0.0002; -0.0002 0.0001];
uss=1+s_ss/hss;
thetass=hss/qss;
vss=uss*thetass;
mu=mss/(u^(alpha)*v^(1-alpha));
hss= (s_ss(1-u))/u;
Jss= (pss-wss)/(1-(1-s_ss)rho);

% [3] Declare model’s
model;
u=u(-1)+s(1-u(-1))-h*u(-1);
theta=v/s;
h=mu*u^(alpha-1)*v^(1-alpha);
q=mu*u^(alpha)*v^(-alpha);
m=mu*u^(alpha)*v^(1-alpha);
We=w+s*rho*Wu(+1)+(1-s)*rho*We(+1);
Wu=z+h*rho*We(+1)+(1-h)*rho*Wu(+1);
J=p-w-s*rho*V(+1)+(1-s)*rho*J(+1);
z=Wu-h*rho*We(+1)-(1-h)*rho*Wu(+1);
c=(w-(1-beta)z-beta*rho)/(beta*theta);
c/q=rho*J(+1);
w=(1-beta)*z+beta*(p+c*theta);
A=gamma*B+epsilon;
s=gamma_11*s(-1)+gamma_12*p(-1)+epsilon_s
p=gamma_12*s(-1)+gamma_22*p(-1)+epsilon_p

% [4] Set initial value for steady state

u=uss;
v=vss;
h=hss;
s=s_ss;
w=wss;
q=qss;
We=Wess;
Wu=Wuss;
J=Jss;
c=css;
z=zss;
m=mss;

% CHECK for residual
 resid(1);

% ASK dynare to calculate the steady state
steady;

resid(1);
pause