var c k y B h A y_h i w r;
varexo eps_a eps_b;

parameters delta psi alpha beta ;

% Parameter Values 

beta = 0.95;        
psi = 0.33;          
alpha = 0.68;         
delta = 0.05; 



%stationarized model

Model;    

y = k^(1-alpha)*exp(eps_a+eps_b)^(alpha-1)*h^alpha;            
log(A)=log(A(-1)) + eps_a;   %% TECHNOLOGY SHOCK                                               
log(B)=log(B(-1)) + eps_b;        %%LABOR SUPPLY SHOCK                                         
r = (1-alpha)*y/k(-1)*exp(eps_a+eps_b);    
w = alpha*y/h;                                           
c^(-1)= exp(eps_a(+1)*eps_b(+1))^(-1)*beta*c(+1)^(-1)*(1+r(+1)-delta);   
h = (c^(-1)*w)^(1/(1/psi));                                             
y_h = y/h;                                                         
c + k = y + (1-delta)*k(-1)*exp(eps_a+eps_b)^(-1);             
i = y-c;


end; 

steady_state_model;
A=1;
B=1;
r=(1/beta)-(1-delta);
y_k=r/(1-alpha);
k_y=(1-alpha)/r;
i_y=(1/y_k)*delta;
c_y=1-i_y;
h= (alpha*1/c_y)^(1+1/psi);
k=((h^alpha)/y_k)^(1/alpha);
y=k^(1-alpha)*h^alpha;
c=c_y*y;
i=i_y*y;
w=alpha*(y/h);
y_h =y/h;
end;

shocks;
var eps_a; stderr 1; 
var eps_b; stderr 1;
end;
resid(1);
steady;

check;


stoch_simul(order=1,periods=10000,drop=1800,nomoments,nofunctions) y h  w y_h c i;