%%%Baseline Model with the new steady state and no banks.
%%%First definition with felxible prices

close all;

var Nc  wc  mcc  Cs rf Yc pic Ac lambdaCs Am;


varexo epsac epsah epsa_m ;

parameters delta chi eta xi zeta  epsilon beta rho_c rho_h rho_s  sigma_sp sigma_A rfss pibar gammaPI gammaR psi;

delta=0.0099;
chi=.1837;
eta=2.5;
xi=.5;
zeta=2;
epsilon=7.5;
beta=.99;
rho_c=0.9;
rho_h=0.9;
rho_s=0.9;
sigma_sp=-0.1;
sigma_A=-3.97;               
rfss=0.0101;
pibar=1;
gammaPI=1.5;
gammaR=.9;
psi=.75;

model;

%%%Agents%%%
lambdaCs-1/Cs=0;
Cs(+1)/Cs=beta*(1+rf)/pic(+1);
-zeta*Nc^(eta-1)+lambdaCs*wc=0;


%%%Firms%%%
mcc=wc/Ac;
Yc=Ac*Nc;
1-epsilon+epsilon*mcc=psi*(pic-1)*pic-psi*beta*Cs(+1)/Cs*pic(+1)*Yc(+1)/Yc*(pic(+1)-1)*pic(+1);

%%%Market Clearing
Yc=Cs;
 
%%%Taylor Rule
(1+rf)/(1+rfss)=Am*((1+rf(-1))/(1+rfss))^gammaR*((pic/pibar)^gammaPI)^(1-gammaR);


%%%Exogenous Processes%% 
log(Am)=rho_c*log(Am(-1))+ epsa_m; 
log(Ac)=rho_c*log(Ac(-1))+ epsac; 



end;
  
initval;
Nc=0.83;
wc=0.8667;
mcc=0.8667;
Cs=0.567604188;
rf=0.0101010099116959;
Yc=0.567604188;
pic=1;
Ac=1;
Am=1;
lambdaCs=1.7618;
end;
  
 resid;
 shocks;
 %var epsac; stderr exp(sigma_A);
 var epsa_m; stderr exp(sigma_A);

end;

steady;
check;

stoch_simul(order=1,irf=40);