$TITLE SIMPLEGE
* Developed by Ruben Mercado

option NLP=MINOS;
* NOTE to PC USERS: Remove the asterisk from the above line.
* i.e., on PC this code must be run with the option NLP=MINOS.

SCALARS
a labor share / 0.7 /
b technology parameter / 1.2 /;

POSITIVE VARIABLES
qs good supply
qd good demand
ld labor demand
ls labor supply
kd capital demand
ks capital supply
p price
w wage
r profit
y income;

VARIABLES
j  performance index;

EQUATIONS
eqs good supply equation (production funcion)
eqd good demand equation
eld labor demand equation
els labor supply equation
ekd capital demand equation
eks capital supply equation
ey  income equation
eml labor market clearing
emk capital market clearing
jd performance index definition;

jd..       j =E= 0;

eqs..     qs =E= b * ld**a * kd**(1-a);
eld..     ld =E= a * qs * p / w;
els..     ls =E= 2;
eml..     ld =E= ls;
ekd..     kd =E= (1-a)* qs * p / r;
eks..     ks =E= 1;
emk..     kd =E= ks;
ey..       y =E= w * ld + r * kd;
eqd..     qd =E= y / p;

*lower bounds to avoid division by zero
p.lo = 0.001;  w.lo = 0.001;  r.lo = 0.001;

*numeraire
p.fx = 1;

MODEL SIMPLEGE /all/;
SOLVE SIMPLEGE MAXIMIZING J USING NLP;
DISPLAY qs.l, qd.l, ld.l, ls.l, kd.l, ks.l, p.l, w.l, r.l, y.l;