There is definitely a problem with the timing of your predetermined state variables, e.g.
% asset market equilibrium
b(+1)/P=b_bar;
a(+1)/P=b_bar;
looks wrong, because those conditions should not just hold in expectations.
There is definitely a problem with the timing of your predetermined state variables, e.g.
% asset market equilibrium
b(+1)/P=b_bar;
a(+1)/P=b_bar;
looks wrong, because those conditions should not just hold in expectations.