# number of states param ns := 4; # grid specification param M := 35; # number of grid points param lb := -0.28; # lower grid bound param ub := 10; # upper grid bound # preference specification param T := 12; # number of household ages param gamma := 3; # relative risk aversion param beta := 0.96; # time preference # economic environment param r := 0.13; # interest rate param borrowsafe := -0.28; # restriction on safe borrowing param borrowrisk := 0; # restriction on risky borrowing # income process param y (tr) : 1 2 3 4 := 1 0.8 0.8 1.0 1.0 2 0.8 0.8 1.0 1.0 3 0.8 0.8 1.0 1.0 4 0.8 0.8 1.0 1.0 5 0.8 0.8 1.0 1.0 6 0.8 0.8 1.0 1.0 7 0.8 0.8 1.0 1.0 8 0.8 0.8 1.0 1.0 9 0.3 0.3 0.375 0.375 10 0.3 0.3 0.375 0.375 11 0.3 0.3 0.375 0.375 12 0.3 0.3 0.375 0.375; # stock return process param R (tr) : 1 2 3 4 := 1 0.9 1.4 0.9 1.4 2 0.9 1.4 0.9 1.4 3 0.9 1.4 0.9 1.4 4 0.9 1.4 0.9 1.4 5 0.9 1.4 0.9 1.4 6 0.9 1.4 0.9 1.4 7 0.9 1.4 0.9 1.4 8 0.9 1.4 0.9 1.4 9 0.9 1.4 0.9 1.4 10 0.9 1.4 0.9 1.4 11 0.9 1.4 0.9 1.4 12 0.9 1.4 0.9 1.4; # transition probabilities param prob : 1 2 3 4 := 1 0.25 0.25 0.25 0.25 2 0.25 0.25 0.25 0.25 3 0.25 0.25 0.25 0.25 4 0.25 0.25 0.25 0.25; #param prob : 1 2 3 4 := # 1 1.00 0.00 0.00 0.00 # 2 0.00 1.00 0.00 0.00 # 3 0.00 0.00 1.00 0.00 # 4 0.00 0.00 0.00 1.00;