Algorithms Flashcards
Describe the Finite difference Method.
The finite difference method is used to approximate derivatives using the following approximation.
What do the euler equations look like after usinf the First Difference approximation.
Describe the Shooting Algorithm
The Shooting Algorithm is used to find the initial consumption level in the growth model which will lead to the steady state.
First, guess C_0.
Second, iterate forward using the First-Diff. of the Euler equations.
Third, try a new C_0 as long as the sequence does not converge.
Explain and detail the first 3 steps of the deterministic Value Function Iteration Method.
In the VFI algorithm, we first start with an initial guess for the Value Function. Wehn then solve using our euler equation for the next period control variable. Then, input this value into our value function which will produce our next guess.
This technique converges to the best approximation given our guess.
Explain and detail the last 2 steps of Value Function Iteration Method for deterministic.
Explain and detail the first 3 steps of the deterministic Value Function Iteration Method.
Explain and detail the last 2 steps of Value Function Iteration Method for deterministic.
Explain the simulation method for finding the Stationary distribution in the heterogeneous
stochastic Growth Model.
Explain the Transition matrix Method method for finding the Stationary distribution in the heterogeneous stochastic Growth Model.
Explain the first 3 steps for finding the policy functions in the heterogeneous stochastic Growth Model using Euler Equation Iteration.
Explain the last 2 steps for finding the policy functions in the heterogeneous stochastic Growth Model using Euler Equation Iteration.
Explain the Power-Spaced Grids for finding the policy functions in the heterogeneous stochastic growth model
Explain the first 3 steps for finding the policy functions in the heterogeneous stochastic Growth Model using Endogeneous Grid Method.
Explain the last 2 steps for finding the policy functions in the heterogeneous stochastic Growth Model using Endogeneous Grid Method.
Explain the steps for finding the policy functions in the heterogeneous stochastic Growth Model using Endogeneous Grid Method with Cash-on-Hand.
