indexes should be in square brackets e.g. kgrid[i] instead of kgrid(i)and secondly in # find value function step you try to assign values to two variables even though right side gives you only one numerical value... plus variable tv is not defined before that assignment...
On Monday, November 24, 2014 12:39:49 AM UTC+1, Pileas wrote: > > OK, I have the following model in which I try to solve the Bellman > equation through function iteration. However somewhere I am wrong. > > This is the code: > > ========================================================================= > > sigma = 1.5; # utility parameter > delta = 0.1; # depreciation rate > beta = 0.95; # discount factor > alpha = 0.30; # capital elasticity of output > nbk = 1000; # number of data points in t > crit = 1; # convergence criterion > epsi = 1e-6; # convergence parameter > ks = ((1-beta*(1-delta))/(alpha*beta))^(1/(alpha-1)); > dev = 0.9; # maximal deviation from ste > kmin = (1-dev)*ks; # lower bound on the grid > kmax = (1+dev)*ks; # upper bound on the grid > dk = (kmax-kmin)/(nbk-1); # implied increment > kgrid = linspace(kmin,kmax,nbk)'; # builds the grid > v = zeros(nbk,1); # value function > dr = zeros(nbk,1); # decision rule (will contain indices) > > while crit > epsi; > for i = 1:nbk > > #compute indexes for which consumption is positive > tmp = (kgrid(i)^alpha+(1-delta)*kgrid(i)-kmin); > imax = min(floor(tmp/dk)+1,nbk); > > #consumption and utility > c = kgrid(i)^alpha+(1-delta)*kgrid(i)-kgrid(1:imax); > util = (c.^(1-sigma)-1)/(1-sigma); > > # find value function > (tv(i),dr(i)) = max(util+beta*v(1:imax)); > end; > > crit = max(abs(tv-v)); # Compute convergence criterion > v = tv; # Update the value function > end > > # Final solution > > kp = kgrid(dr); > c = kgrid.^alpha+(1-delta)*kgrid-kp; > util= (c.^(1-sigma)-1)/(1-sigma); > ====================================================================== > > It gives me the following error: ERROR: invalid assignment location > > >
