This folder contains code that solves models from the paper of Bayer and Luetikke, "Solving heterogeneous agent models in discrete time with many idiosyncratic states by perturbation methods" found at:

https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13071#

The paper solves three models, represented here in three places:

A Krusell-Smith model with a single asset:

• [OneAsset-KS]
  • in Assets/One execute SteadyStateOneAssetIOUs.py then FluctuationsOneAssetIOUs.py

A HANK model with a single asset: - [OneAsset-HANK] - in Assets/One execute SteadyStateOneAssetIOUsBond.py then FluctuationsOneAssetIOUs.py

A HANK model with a liquid and an illiquid asset, [TwoAsset-HANK] - [TwoAsset-HANK] - in Assets/Two execute SteadyStateTwoAsset.py then FluctuationsTwoAsset.py

Other content:

1. BayerLuetticke_wrapper.py creates a wrapper to the one asset version of BayerLuettike's code.

   • This file:

     • Creates BayerLuettickeAgent and BayerLuettickeEconomy which are simple wrappers to BayerLuetikke's code, presently only the steady state part of this.
     • Simulates a BayerLuettickeEconomy with 10,000 agents in steady state

2. ConsIndShockModel_extension.py extends ConsIndShockModel to calculate and store a histogram of the distribution of agents.

   • This is a starting point for an alternative method for creating the steady state required as an input for the BL method. (It's only a starting point because the remaining steps to format the output in the manner required by the BL code have not been taken).