Week 10 Homework Feedback: Ignazio Nunzi

Overall Assessment

Grade: ✅ (Pass)

Correct submission. You implemented the EGM method and even included a comparison with the Coleman method, which is a nice addition. Your results are accurate.

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 included in the code structure (implied by results).
  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 Ignazio_egm.m correctly implements the Endogenous Grid Method.
  • Comparison: Comparing EGM speed and accuracy against Coleman is very good practice.
  • Hybrid Approach: You also used fzero for the resource constraint inversion (Step 3).

Visual Output

  • Figures are generated and saved correctly.

Suggestions for Improvement

  1. Efficiency: As with other submissions using this hybrid approach, you could replace the fzero loop with a direct interpolation of the resource constraint for greater speed.

Summary

11/11 tasks correct. Correct work.