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var n,y,lambda,u,zmu,w,B,m,c,v,q,p,tau,Theta,R,Z;                                                                                       %
varexo eb, ez;                                                                                                                          %
parameters rho, chi, alpha, beta,sigma,omega,epsilon,mu_e_ss,mu_ss,n_ss,q_ss,u_ss,sd_bs,sd_zs,delta,b,rhob,js_ss,m_ss,v_ss,theta,       %
           kappa, wu, rhoz;                                                                                                             %
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alpha		= 0.5;                                                                                                                      % Vacancy elasticity of matches
beta		= 0.99;                                                                                                                     % discount factor
phi         = 0.54;                                                                                                                     % replacement ratio
rho         = 0.1;                                                                                                                      % separation reate (exogenous)
sigma		= 2;                                                                                                                        % relative risk aversion
omega		= 0.75;                                                                                                                     % probability for a firm of not being able to adjust its prices, omega = 0 would change delta to 0!
epsilon		= 6;                                                                                                                        %
mu_e_ss 	= 1;                                                                                                                        % markup (efficient steady-state)
mu_ss		= epsilon/(epsilon-1);                                                                                                      % markup (steady state, has not necessarily to be efficient)	
n_ss		= 0.9416;                                                                                                                   % labour force
q_ss		= 0.9;                                                                                                                      % vancancy filling rate in the steady-state
u_ss 		= 0.0584;                                                                                                                   % unemployment (steady_state) as needed for ensure n_ss
chi         = (rho*n_ss)^(1-alpha)*u_ss^(alpha-1)*q_ss^alpha;                                                                           % parameterization for chi to ensure the steady state of n_ss (TFP matching function)
sd_bs		= 0.0387;                                                                                                                   % standard deviation of bargaining shock
sd_zs		= 0.0032;                                                                                                                   % standard deviation of technology shock
delta		= (1-omega)*(1-omega*beta)/omega;                                                                                           % coefficient on loglinear inflation equation for sticky prices and pi_ss=1 
b           = 1-alpha;                                                                                                                  % Hosios condition
rhob		= 0.8;                                                                                                                      % 
rhoz        = 0.0;                                                                                                                      %
theta       = v_ss/q_ss;                                                                                                                %
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%steady state values%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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js_ss       = 1-((1-rho)*n_ss);                                                                                                         % job seekers (steady-state)
m_ss		= rho*n_ss;                                                                                                                 % matches (steady-state)
v_ss 		= m_ss/q_ss;                                                                                                                % ss vacancies
theta		= v_ss/u_ss;                                                                                                                % labour market tightness (steady-state)	    									% 
kappa 		= (1-phi)/(mu_e_ss*(((1/q_ss)*((1-phi)+(b/(1-b))))-((1-rho)*(beta)*(1/q_ss)*((1-phi)+((1-(m_ss/u_ss))*(b/(1-b)))))));       % cost of posting a vacancy                                              %
wu          = (1/mu_e_ss)-(1/(1-b))*(kappa/q_ss-beta*(1-rho)*(1-b*(m_ss/u_ss))*kappa/q_ss);                                             % wage home production
%vj_ss		= kappa/q_ss;                                                                                                               % value of a filled job
%w_ss		= wu*phi^-1;                                                                                                                % wholesale wage (steady-state)
%pr_ss		= m_ss*js_ss^-1;                                                                                                            % probability of finding a job (steady-state)
%ri_ss		= beta^-1;                                                                                                                  % real interest rate (steady-state)
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%MODEL%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
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model;
%n          = (1-rho)*n(-1)+chi*v(0)^alpha*u(0)^(1-alpha);
n       	= (1-rho)*n(-1)+m(0);
y           = c(0)-wu(0)*(1-n(0))+kappa*v(0)^alpha*u(0)^(1-alpha);
lambda 		= beta*R(0)*lambda(1);
u           = 1-(1-rho)*n(-1);
zmu 		= w(0)+kappa/q(0)-(1-rho)*beta*lambda(+1)/lambda(0)*kappa/q(+1);
w           = (1-b(0))*wu+b(0)*(zmu(0)+(1-rho)*R(0)*kappa/q(+1)*p(+1));                                            % z/mu
B           = rhob*B(-1)+eb;
m           = rho*n(0);
q           = m(0)/v(0);
p           = m(0)/u(0);
tau         = wu+(1/1-b(0))*(kappa/q(0)-(1-rho)*1/R(0)*(1-b(0)*p(+1))*kappa/q(+1));
R           = 1/(beta*(lambda(+1)/lambda(0)));
Z           = rhoz*Z(0)+ez;
c           = Z(0)*n(0)+(wu*(1-chi*Theta(0)^alpha)-kappa*theta(0))*u(0);
Theta       = v(0)/u(0);
v           = m(0)/q(0);
end;

initval;
n           = n_ss;
m           = rho*n_ss;
w           = wu*phi^-1;
u           = u_ss;
B           = b;
q           = q_ss;
Z           = 1;
v           = v_ss;
Theta       = theta;
end;

steady;
check;

shocks;
var eb      = sd_bs;
var ez      = sd_zs;
end;

stoch_simul(periods=3000);