Week 10 Homework Feedback: Klea Lushaj

Overall Assessment

Grade: ✅ (Pass)

Correct submission. You implemented the EGM method correctly and saved all required results and figures.

Task-by-Task Check

Task 1: Quantifying Precautionary Savings

  1. Parameter & Grid Setup: ✅ Correct.
  2. Solution Method: ✅ EGM implemented correctly.
  3. Deterministic Case: ✅ Solved.
  4. Stochastic Case: ✅ Solved.
  5. Simulation: ✅ Simulation logic is correct.
  6. Comparison: ✅ Premium calculated.

Task 2: The Role of Risk Aversion

  1. Sigma Variation: ✅ Implemented.
  2. Solving Sigma Cases: ✅ Solved.
  3. Policy Plot: ✅ Plotted.
  4. Simulation Comparison: ✅ Calculated.
  5. Interpretation: ✅ Correct.

Technical Implementation

  • EGM Logic: Your solve_egm function is correct.
  • Error Handling: You included try-catch blocks in the fzero call, which is good for robustness, though ideally, the bounds should be set such that fzero always finds a root.
  • File Management: Good organization with saving .mat files.

Visual Output

  • Figures are saved correctly.

Suggestions for Improvement

  1. Efficiency: Consider using interpolation for the resource constraint inversion instead of fzero to speed up the code.

Summary

11/11 tasks correct. Correct work.