PS2 - ECN 713 Spring 2010 Natalia Kovrijnykh Problem Set 2:...

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ECN 713 Spring 2010 Natalia Kovrijnykh Problem Set 2: Due on Thursday, February 11 in class (100 points total) Write a MATLAB code for the following stochastic growth model. The state of a rep- k , and a productivity shock, z . The shock can take two values, z L = : 9 and z H = 1 : 1 transition matrix Q ( z; z 0 ) , where the transition probabilities of staying at either value is : 8 . The agent is endowed with one unit of time each period and maximizes his expected discounted utility of consumption, E 1 P t =0 t u ( c t ) , where u ( c ) = log ( c ) and = : 9 . (The agent does not care about leisure.) The output from the Cobb-Douglas production technology, y t = z t k t l 1 t , where ± = : 3 , is divided between consumption and investment into the capital stock. The capital stock depreciation is ² = : 1 . Use the interval
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This note was uploaded on 11/19/2010 for the course ECON 210b taught by Professor Natalia during the Spring '10 term at ASU.

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PS2 - ECN 713 Spring 2010 Natalia Kovrijnykh Problem Set 2:...

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