Commit 480ac19
Complete Job Search IV lecture: Add utility function and fitted VFI implementation
Updated mccall_fitted_vfi.md to implement the continuous wage offer model with CRRA utility.
Key changes:
- Added CRRA utility function u(c, γ) = (c^(1-γ) - 1)/(1-γ) to mathematical formulation
- Updated Model class to include ρ, ν, and γ parameters
- Implemented Monte Carlo integration for computing conditional expectations (Pv_u)(w)
- Updated Bellman operator T() to use u(w, γ) and u(c, γ)
- Added get_greedy() function for computing optimal policy
- Fixed all model unpacking throughout code
- Implemented compute_expectation() using w' = w^ρ * exp(ν * z) with standard normal draws
- Added Exercise 3: Exploring reservation wage as function of risk aversion γ
- Reformatted text: each sentence on separate line for better version control
Mathematical consistency:
- Code now matches theory where wages and unemployment compensation enter through utility function
- Monte Carlo approximation: (Pv_u)(w) ≈ (1/N) Σ v_u(w^ρ exp(ν z_i))
- Proper JAX implementation with interpolation for fitted value function iteration
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Co-Authored-By: Claude <[email protected]>1 parent d80f921 commit 480ac19
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