rhs = alpha(1)*psi(t,1)

      z(t,3) = rhs**(1/alpha(2)) 

      fac1 = theta(t,1)*(z(t-1,1)**alpha(3))

      fac2 = (1-alpha(3))*(1-alpha(6))*fac1*alpha(1)*psi(t,1)



      wh = whold

      call fderzero(f,derf,u1,u2,wh,prec,isol,alpha,fac2) 

      if (isol.eq.0) then

          write(*,*) 'troubles with working hours routine'

          stop

          endif

      z(t,4) = isol      

      wold = wh



ccccc  here along homotopy move alpha(8) from 0 to 1.



      z(t,2) = alpha(8)*wh + (1-alpha(8)) 



      prod = (z(t,2)**(1-alpha(3)))*fac1

      yncome = (1-alpha(7))*(alpha(3)*prod - alpha(5)*z(t-1,1)) +

     &         (1-alpha(6))*(1-alpha(3))*prod 

      

      z(t,1) = z(t-1,1) + yncome - z(t,3)

      

      if (z(t,1).le.0) then

          write(*,*) 'consumption too large'

          stop

          endif

                

      zlog(t,1) = log(z(t,1))  

      

C     calculate the phi to be predicted

C     'phi' contains the stuff inside the conditional expectation that

C      we will try to predict in sbeta



      

      ret = 1 + (1-alpha(7))*(alpha(3)*prod/z(t-1,1) - alpha(5))



      phi(t-1,1) = rhs*ret