Add new lecture: Aiyagari model with Endogenous Grid Method#675
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Add new lecture: Aiyagari model with Endogenous Grid Method#675
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- Combines Aiyagari model with EGM solution method - Replaces Howard policy iteration with EGM-based Coleman-Reffett operator - Computes aggregate capital via simulation instead of stationary distribution - Includes wealth distribution analysis and Lorenz curves - Provides comparison with standard approach and extension exercises
- Corrected endogenous grid method logic for Aiyagari model - Fixed computation of endogenous asset grid: a = (c + a' - wz)/(1+r) - Added proper handling of borrowing constraint in interpolation - EGM now converges in ~90 iterations (previously diverged) - Verified with test suite: all tests pass
- Increased asset grid maximum from 20 to 50 to handle high savings - Added asset clipping to prevent extrapolation issues in simulation - Added comments explaining interpolation/extrapolation behavior - Verified equilibrium computation: K* ≈ 8 (reasonable for these parameters) - All tests now pass with stable, reasonable results
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📖 Netlify Preview Ready! Preview URL: https://pr-675--sunny-cactus-210e3e.netlify.app (b483555) 📚 Changed Lecture Pages: aiyagari, aiyagari_egm |
- Added aiyagari_egm.md to _toc.yml - Placed directly after aiyagari.md in Multiple Agent Models section
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📖 Netlify Preview Ready! Preview URL: https://pr-675--sunny-cactus-210e3e.netlify.app (f8ff48d) 📚 Changed Lecture Pages: aiyagari, aiyagari_egm |
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This is an experimental project --- do not merge. |
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Closing this PR in favor of #676 which uses a local branch instead of a Claude-generated branch. |
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This PR adds a new lecture aiyagari_egm.md that combines the Aiyagari model with the Endogenous Grid Method (EGM).
Overview
The lecture combines two important computational methods:
Key Features
Theory and Implementation
Code Components
Implementation Details
Fixes Applied
Testing