%RAMSEY_RUN.M
%Compute a second-order approximation of the Ramsey equilibrium conditions of the model developed in  ``Optimal Fiscal and Monetary Policy Under Sticky Prices,'' by S. Schmitt-Grohe and Martin Uribe (JET, February 2006)
%(c) Stephanie Schmitt-Grohe and Martin Uribe, May 2006

%Prerequisits: run RAMSEY_SS.mat (produced by  RAMSEY_SS.M) and RAMSEY_F.MAT (produced by RAMSEY_F.M)
%Output: RAMSEY_RUN.MAT 

clear all

load ramsey_f %produced by RAMSEY_F.M

load ramsey_ss %produced by ramsey_ss.m

approx = 2;

num_eval

[gx,hx, exitflag] = gx_hx(nfy,nfx,nfyp,nfxp, 1+1e-4);
disp('done with gx_hx')

%Recall that the innovation to the state vector is given by sigma * ETAMATRIX * eps_{t+1}, where sigma is a scalar, ETAMATRIX is a nx*ne matrix and eps_t is a vector of exogenous innovations of size neX1 distributed (0,I);
ne=2; 
ETAMATRIX = zeros(size(fx,2),ne); 

%The gov't purchases and techno shocks take the last 2 elements of the state vector x (see ramsey_f.M). Thus,
ETAMATRIX(end-1,1)=STD_EPSG;
ETAMATRIX(end,2)=STD_EPSZ;

if approx==2 & (exitflag==1)

[gxx,hxx] = gxx_hxx(nfx,nfxp,nfy,nfyp,nfypyp,nfypy,nfypxp,nfypx,nfyyp,nfyy,nfyxp,nfyx,nfxpyp,nfxpy,nfxpxp,nfxpx,nfxyp,nfxy,nfxxp,nfxx,hx,gx);

disp('done with gxx_hxx')

[gss,hss] = gss_hss(nfx,nfxp,nfy,nfyp,nfypyp,nfypy,nfypxp,nfypx,nfyyp,nfyy,nfyxp,nfyx,nfxpyp,nfxpy,nfxpxp,nfxpx,nfxyp,nfxy,nfxxp,nfxx,hx,gx,gxx,ETAMATRIX);

disp('done with gss_hss')

sig =1;

end %if approx==2

save ramsey_run.mat