Utility Function - 2 Occupational Choice

This function evaluates the utility at each combination of current assets, entrepreneurial productivity and future assets a' for a 2 OC model

Back to full code page https://kritikhanna.github.io/BKS-modified/

Function Inputs : asset grid(1 by M) and entrepreneurial productivity grid(1 by N) relevant model parameters required Calls the 2 OC to evaluate COH required to compute utility

Function Outputs : Matrix of utility (both M X N X M) for each combination of a and z and a'

Assigning parameters
Calling OC2
Computing consumption
Computing utility
Printing outputs

function [mt_util,mt_coh, mt_k, mt_l, mt_o]=hhsave_util_2OC(varargin)

close all;
bl_profile = false;      % Switch off profile if running a tester/calling from another function
if(bl_profile)
profile off;
profile on;
end

addpath(genpath('/Users/sidhantkhanna/Documents/GitHub/BKS modified/'));

Assigning parameters

if ~isempty(varargin)

    [ar_a,ar_z, ...
        fl_alpha,fl_theta,fl_delta,fl_kappa,fl_r,fl_w,fl_phi,fl_ahi,fl_zhi, ...
         fl_risk,it_zgridno, it_agridno, ...
        ] = varargin{:};

    bl_print  = false;


else
    close all;

    fl_ahi         = 5;
    fl_zhi         = 2.2;
    it_agridno     = 4;
    it_zgridno     = 5;
    ar_a = linspace(0,fl_ahi,it_agridno);
    ar_z = linspace(1,fl_zhi,it_zgridno);
    fl_phi         = 0.5;
    fl_risk        = 2;

    fl_alpha = 0.4;
    fl_theta = 0.79-fl_alpha;
    fl_delta = 0.05;
    fl_kappa = 0;

    [fl_r,fl_w] = ...
        deal(0.05,1.5);
    bl_print       = true;

end

fl_R = fl_r + fl_delta;

Calling OC2

[mt_o, mt_coh, mt_k, mt_l] = OC2(ar_a,ar_z, ...
        fl_alpha,fl_theta,fl_delta,fl_kappa,fl_r,fl_w,fl_phi,fl_ahi,fl_zhi, ...
         it_zgridno, it_agridno);

Computing consumption

mt3_coh= repmat (mt_coh, [1 1 it_agridno]);
%Projecting COH matrix to a third dimension of size of asset grid which will be used for evaluating optimal future assets

mt_futassets=ones(it_agridno,it_zgridno,it_agridno).*ar_a';
% 3d asset matrix to subtract future assets from COH to compute consumption

mt_futassets=permute(mt_futassets,[3 2 1]);
% reorder matrix to correct dimension so as to match COH matrix layout

mt_con =mt3_coh-mt_futassets;                       % Consumption Matrix for each a, z, future a

neg = find(mt_con<=0);                              % Find where consumption is negative ( each combi of a, z, a')

Computing utility

%mt_con(neg) = NaN;

if(fl_risk==1)
    mt_util=log(mt_con);
else
mt_util= (mt_con.^(1-fl_risk) -1)/(1-fl_risk);    % Utility Part of value function
end
mt_util(neg) = -1000;         % Assign big negative value to optimal consumption

Printing outputs

if(bl_print)
    disp('Below is the COH matrix for for all combinations of a, z and future a');
    disp(mt3_coh);
    disp('Below is the future assets matrix for each combination of a, z and future a');
    disp(mt_futassets);
    disp('Below is the consumption matrix for for all combinations of a, z and future a');
    disp(mt_con);
    disp('Below is the utility matrix for for all combinations of a, z and future a');
    disp(mt_util);
 end

if(bl_profile)
profile off;
profile viewer;
st_file_name = '/Users/sidhantkhanna/Documents/GitHub/BKS modified/code/Profile/Households/hhsave_util_2OC';
profsave(profile('info'), st_file_name);
end