Modifications to A Gentle Introduction to HARK

[sidd3888]

A Gentle Introduction to HARK

Your First HARK Model: Perfect Foresight

• Better to address survival probabilities as $\aleph_t$ to begin with, or express both survival probabilities and growth factors as constants from the outset, rather than jumping back and forth
• Introduction of notation $D_t$ for probability of death is unnecessary and unused, as this is just $1 - \aleph_t$

Solving an Agent's Problem

• Change "paramterization" to "parameterization" (pargraph after PFexample.solve())
• Change "associated the lecture notes" to "associated lecture notes" (after next code block)

Changing Agent Parameters

• Upon creating the new instance NewExample with the original discount factor and growth factor $\Gamma = 0.01$, the diagram shows the consumption to be much higher than in the case with $\Gamma=1.01$, though the commentary indicates that the graph should emanate from near 0

Your Second HARK Model: Adding Income Shocks

• The notation used for the second model with a borrowing constraints and income shocks is a little confusing. For instance, whereas variables are normalized, the value function is also written as $v_t$ instead of $V_t$ as before, though $U(\cdot)$ is maintained as is. This makes it confusing to the unversed reader. Maybe explaining some of the new notation clearly would also help
• Remove large whitespace between the term $\max_{c_t} U(c_t)$ and the expected continuation value in the statement of the value function
• Some of the variables, such as standard deviation of the permanent and transitory income shocks are stated inside lists. Might help to explain why these are in lists as opposed to being scalars

@alanlujan91: If I can help in making some of the necessary changes, happy to do so