Hello,
I am trying to adapt the code from the Optimal Savings III: Occasionally Binding Constraints lecture to accommodate two decision variables (the agents are choosing labour supply as well as consumption). How do I adapt the code for accomplishing this?
Thank you very much
Hi Conway:
This is possible. In my experience, using Coleman(policy) iteration was difficult (check out Marcet et al, Journal of Monetary Economics, 2006). Another good paper for the theory is Pijoan-Mas, Review of Economic Dynamics, 2006.
Using Bellman iteration is easier but a bit slower. You can check out some old code (not very clean, but correct!), see line 190 here
If you decide to try doing Coleman (policy) iteration, I would be intersted to see what you come up with as I think it is an interesting problem.
Labor choice is within period optimization. Therefore what you need to do is basically choose c and y jointly and then do policy function iteration. It’s a bit harder than adapting the code in Optimal Growth III, if that’s the code you are referring to (otherwise could you post the link here?)
Dear colleague, have you deleted the code or just moved elsewhere. Would you be so kind to provide an updated link. Thank you.
Have you succeeded with your approach. Can you share the results?
Are you referring to this? https://github.com/akshayshanker/workandplay
Thank you very much. I think it’s a similar topic, although it seems to be a bit more complicated than it seems at first 