var c r r_f w v l k i y a b d g tb nd ;
/* c : consumption of the representative household */
/* r the interest rate on the government debt (per quarter) */
/* r_f the external debt interest rate (per quarter) */
/* w the wage */
/* v the return on capital (rental rate) */
/* l, k, i, y, a as usual */
/* b the external debt */
/* g the public expenditures */
/* tb the trade balance */
/* nd the government balance */

varexo mi ni ;
/* ni is the shock on the public expenditures */
/* mi on the technology */
parameters bet del rho1 rho2 mu gamma fi theta omega psi tau dpib T pie iota gpib tbpib zita gbar;
/* del is the depreciation per quarter */
del=.025 ;
/* bet the discount rate, that is equal at the ss to 1/(1+r_f) with r_f the external debt interest rate per quarter */
bet=1/1.01375 ;
/* rho1 the persistance of techno shocks and rho2 the persistance of fiscal shocks */
rho1=.904 ;
rho2=.914 ;
/* mu the tax rate  */
mu=0.065 ;
/* gamma is the risk aversion */
gamma=2 ;
/* capital adjustment cost parameter */
fi=.028 ;
/* theta is the capital share in ouput */
theta = .32 ;
/* omega is the world interest rate per quarter */
omega=.01375 ;
/* psi is the debt elasticity of the country specific risk premium 5Schmitt-Grohé & Uribe */
psi=.000742 ;
/* tau is the income tax rate */
tau=.33;
/* dpib is the ss value of the government debt to output */
dpib=.57;
/* T are transfers, which satisfies the ss values of dpib, gpib and tau*y(steadystate) */
T=(-0.01375)*(0.57*0.52836531)-0.2*0.52836531+0.33*0.52836531;
/* pie is th curvature parameter in labour (same as Mendoza, 1991) */
pie = 1.445 ;
/* iota is the labour coefficient set so the labour is equal to 0.2 at the ss */
iota=1.64 ;
/* gpib is is the ss value of the government expenditures to output */
gpib=0.2;
/* tbpib is the ss value of the trade balance to output */
tbpib=.03;
/* zita is the level of external debt at the ss, ie =tbpib*y(steadystate)/(worldinterestrate) */
zita=0.52836531*(0.03)/0.01375;
/* gbar is the mean level of public expenditures = public expenditures at the SS */
gbar=0.2*0.52836531;
end;

model;
(c-(iota*l^(pie)))^(-gamma)=bet*(1+r_f)*((c(1)-iota*l(1)^pie)^(-gamma));
iota*pie*l^(pie-1)=(1-tau)*w;
w=a*(k/l)^(theta)*(1-theta);
v=theta*a*(l/k)^(1-theta);
r_f=omega+psi*(exp(b-zita)-1);
y=a*(k^theta)*(l^(1-theta));
log(g)=(1-rho2)*log(gbar)+rho2*log(g(-1))+ni;
log(a)=rho1*log(a(-1))+mi;
r=r_f+mu;
y=c+i+g+fi*(k(1)-k)+tb;
1+r-mu=1+(1-tau)*v(1)-del+fi*(k(2)-k(1));
i=k(1)-(1-del)*k;
b=(1+r_f(-1))*b(-1)+c+i+d+((fi^2)/2)*(k(1)-k)+tau*y+mu*d-w*l-T-v*k-(1+r(-1))*d(-1);
d=(1+r(-1))*d(-1)+T+g-tau*y-mu*d(-1);
nd=d(-1)-d;
end;

steady_state_model;
a=1;
r_f=omega;
r=r_f+mu;
v=(omega+del)/(1-tau);
w=(1-theta)*(v/theta)^(theta/(theta-1));
l=(((1-tau)*w)/(iota*pie))^(1/(pie-1));
k=((w*l^(theta))/(1-theta))^(1/theta);
y=k^(theta)*l^(1-theta);
i=del*k;
g=gpib*y;
tb=tbpib*y;
d=(tau*y-T-g)/(r-mu);
b=tbpib*y/omega;
c=y-i-g-tb;	
nd=0;
end;

steady;

shocks;
var mi; stderr .009;
end;

resid;
check;

//options_.loglinear=1;
stoch_simul(order=2, periods=1000);
//stoch_simul(order2, periods=1000, irf=30, hp_filter=1600);

return

stoch_simul(irf=30);
//return