```
var y p c b rb g z;
varexo eps;
parameters cdelta, eta, sig, cbeta, cgam, crho, csigma;
cdelta = 0.36;
eta = 0.05;
sig = 0.67;
cbeta = 0.99;
cgam = 1;
crho = 0.5;
csigma = 0.02;
model;
(1-cdelta/cdelta)*c^(1+eta) = p;
(1-cdelta/cdelta)*g^(1+eta) = b;
g^1-sig = ((1+c+g)^cbeta)*(g^1-sig);
y = -rb+cgam*b(+1)+c+g;
b = exp(z)*(g/y);
rb = exp(z)*(b/g);
z = crho*z(-1)+ eps;
end;
initval;
y = 9;
p = 8;
c = 5;
b = 10;
rb = 1;
g = 4;
z = 0;
end;
steady;
shocks;
var eps = csigma^2;
end;
stoch_simul(order=2, irf=40);
```

You can see in the policy functions that those variables only have 0 coefficients. So there is something in the model that causes those variables not to react to the shock.

How do I address this thing in the model that causes those variables to not respond?

By understanding and modifying the model you built. You are the only one who knows the model.

Thank you for your kindly help.

I modified the model and it’s done , I want your help about the command I can write it to estimate parameters and the relationship between the variables in the model .

I want you to help me by write me the command order and how can I enter the data file .

Please find the attached file with update and it’s done .

final model.txt (554 Bytes)

Sorry, I cannot guide you from scratch here. I would recommend you consult my Guide to Observation equations first.

Can you send me your Guide to Observation equations ?

And thanks for your answer.

It’s at Pfeifer (2013): “A Guide to Specifying Observation Equations for the Estimation of DSGE Models”

Thanks for your help.