Simple monetary model
I am trying to solve this model, someone can please help me.
var c, m, p, z; % Endogenous variables: c_t , m_t , P_t , z_t
varexo e; % Exogenous shock: epsilon_t
parameters beta theta tau rho ; % Parameters: beta , theta , tau , rho
beta = 0.99; % beta = 0.99
theta = 0.5; % theta = 0.5
tau = 2; % tau = 2
rho = 0.9; % rho = 0.9
model ;
(c^ theta * (m/p)^(1 - theta ))^(1 - tau )/c - beta + (...) ; %Partial FOC from utility
m (+1) = (1 + i) * m - p * c; % Money evolution
p = z; % Price rule
z = rho * z( -1) + e; % Shock process
end ;
initval ;
c = 1; % Initial c_t
m = 1; % Initial m_t
p = 1; % Initial P_t
z = 1; % Initial z_t
end ;
shocks ;
var e = 0.01; % Variance of epsilon_t = 0.01
end ;
steady ; % Compute steady state
stoch_simul ( order =1, irf =10) ; % Solve with first -order approximation , 10- period IRFs