Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099673 | Journal of Economic Dynamics and Control | 2010 | 15 Pages |
Abstract
We show how the method of endogenous gridpoints can be extended to solve models with occasionally binding constraints among endogenous variables very efficiently. We present the method for a consumer problem with occasionally binding collateral constraints and non-separable utility in durable and non-durable consumption. This problem allows for a joint analysis of durable and non-durable consumption in models with uninsurable income risk which is important to understand patterns of consumption, saving and collateralized debt. We illustrate the algorithm and its efficiency by calibrating the model to US data.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Thomas Hintermaier, Winfried Koeniger,