Hello,

I am writing a NK model as in Iacoviello 2005. Could you please let me know if the MP rule I write below is correct and should work? Thanks

i = i(-1)+(1+i(-1))*(rho_i*(i(-1)-r_ss)/(1+r_ss)

+(1-rho_i)*(rho_pi*((pi(-1)-pi_ss)/pi_ss)

+rho_y*((y(-1)-y_ss)/y_ss))

+(aggregateMP-aggregateMP(-1)));

aggregateMP = ssigmaMP * aggregateMPShock;

where

rho_i = .73;

rho_pi = 1.27;

rho_y = .13;

r_ss = 0.0212;

pi_ss = 1.008;

y_ss = 1;

ssigmaMP = 0.29;

varexo aggregateMPShock;