Week 10 Homework Feedback: Pablo Romanella

Overall Assessment

Grade: ✅ (Pass)

Correct submission. You implemented EGM correctly and successfully completed the tasks.

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: Correct implementation.
  • Hybrid Approach: You used fzero for the resource constraint inversion (line 77).
  • Structure: The script is self-contained and readable.

Visual Output

  • Figures are saved correctly.

Suggestions for Improvement

  1. Efficiency: As with many others, the fzero loop can be replaced by interpolation to improve speed.

Summary

11/11 tasks correct. Correct work.