Cake Eating Lecture with Variable Labor

Lectures
1

I am trying to extend the Cake Eating lecture to allow for labor supply, but I am facing some difficulties with the value function iteration. Is there any other lecture/notebook that explain how to setup the code when you have more than one control variable. Thanks in advance

2

Hi @aorestrup , good question. Strangely enough, we don’t have any material on savings models with endogenous labor choice. It would be good to rectify this. Unfortunately I’m tied up on too many projects and can’t do this right now.

If you post your code, someone (including me) might take a look at it and suggest some changes…?

1 Like
3

Thanks @john.stachurski. I will get my preliminary code in better shape and share here. Thanks again for your quick reply

4

thanks for the awesome information.

5

Hi everyone! I was starting now to do some exercises using DDP and I was trying also to do this. Should I include labor in the action state? But how could I limit the labor choice between 0 and 1? If I create a grid also for labor to account for this, isn’t that problematic in termos of memory when I construct the Q matrix? Thanks in advance

6

Hi @33080_miguel , yes that’s a disadvantage of DDP, which can only be used for relatively small problems.

I recommend that you consider using JAX and perhaps extending the “Optimal Savings” lecture in Quantitative Economics with JAX — Quantitative Economics with Python using JAX

Good luck with your code.

7

First of all, @john.stachurski, we owe you a debt of gratitude for all the hard work you have done.
My question is a kind of a kind reminder. Did you just happen to find the time to add this kind of problem to the site? It would be essential…