Week 10 Homework Feedback: Giovanni Rampello

Overall Assessment

Grade: ✅ (Pass)

Correct submission. You implemented the EGM method and correctly simulated the results.

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_case function works correctly.
  • Hybrid Approach: You used fzero with a try-catch block for robustness (lines 175-179).
  • Monotonicity: You handled potential non-monotonicity in k_endo before interpolation (lines 190-194), which is excellent practice.

Visual Output

  • Figures are generated.

Suggestions for Improvement

  1. Efficiency: Interpolation can replace the fzero loop for speed.

Summary

11/11 tasks correct. Correct work.