var x pi R r u;

varexo e_r e_u;

parameters sigma beta kappa omega rho_r rho_u mu1 mu2 gamma theta;

sigma = 1.5;

beta = 0.995;

kappa = 0.02;

omega = 0.5;

rho_r = 0.5;

rho_u = 0.5;

mu1 = 1.5;

mu2 = 0.13;

gamma = 0.5;

theta = {0, 0.5, 1};

model(linear);

x = x(+1)-(1/sigma)*(R-pi(+1)-r);

pi = beta*(1-theta)*pi(+1)+theta*pi(-1)+kappa*x+u;

R = mu1*pi+mu2*x;

r = rho_r*r(-1)+e_r;

u = rho_u*u(-1)+e_u;

end;

shocks;

var e_r; stderr 1;

var e_u; stderr 1;

end;

stoch_simul(oder=1);

Loss = (1/2)*(oo_.var(pi, pi)+omega*oo_.var(x,x)+gamma*oo_.var(R,R));