// endogenous variables
var k, P, q, x, a, ppi, mu, omega, ii, tau, n, Lam;
 
// exogenous variable
varexo  z ;
 
// parameters 
parameters rho, theta, gam, alpha, phi, eta, del, psi, bet, W, A; 
alpha = 0.2;
gam = 2;
del = 0.1;
rho = 3.0;
phi = 0.33;
theta=0.1;
eta=2;
psi=.95;
bet = .99; 
A = 1;
W = 1;
 
model;
// first order conditions
  ppi = (1/theta)*W/P*(x/A)^(1/theta)*(1/x);
  bet*ppi(+1)=1-(1/rho)*((rho-1)*mu+1);
  1-(1/rho)*((rho-1)*mu+1)= ppi-(1-1/rho)*(mu/tau);
  omega=ii*(1-alpha+alpha*tau^(1-gam))^((rho-1)/(1-gam));
  a=a(-1)+x-omega(-1);
  tau=a/omega;
  mu=alpha*tau^(1-gam)/(1-alpha+alpha*tau^(1-gam));
  W = (1-phi)*Lam*(k/n)^phi;
  q = P*(1+eta*(ii/k)^(eta-1));
  q = bet*(Lam(+1)*phi*(k(+1)/n(+1))^(phi-1)-P(+1)*(1-eta)*(ii(+1)/k(+1))^eta+(1-del)*q(+1)); 
  k(+1)=k*(1-del)+ii;
  ln(Lam)=z+psi*ln(Lam(-1));
end;

// Starting values
initval;
k = 6;
P = 4.5;
q = 5.5; 
x = 1;
a = 4;
ppi = 0.6;
mu = 0.1; 
omega = 1;
ii = .5;
tau = 5;
n = 2;
Lam = 1;
end;
 
steady;
 
shocks;
 
var z; stderr .1;
end;
 
stoch_simul(irf=10);