main.asv

% De Nardi 2006 JPE
% Baseline model with entrepreneur

% parameters
pa.sa = 200;
pa.sy = 5;
pa.stheta = 2;
pa.sk = pa.sa;
pa.beta = 0.865;
pa.sigma = 1.5;
pa.delta = 0.06;
pa.eta = 1;
pa.nu = 0.88; % entrep power
pa.alpha = 0.33; % capital share
pa.A = 1; % TFP of non-entrepre
pa.p = 0.4; % pension proportion
pa.f = 0.75; % run-away wealth
pa.pyou = 0.978; %stay young
pa.pold = 0.911; %stay old
pa.Py = [.7376 .2473 .0150 .0002 .0000;
                .1947 .5555 .2328 .0169 .0001;
                .0113 .2221 .5333 .2221 .0113;
                .0001 .0169 .2328 .5555 .1947;
                .0000 .0002 .0150 .2473 .7376];
pa.Ptheta = [ .964 .036;
                        .206 .794];
% grid for a 
pa.mina = 0;
pa.maxa = 1700;
pa.mink = 0.05;
pa.maxk = pa.maxa;

a = linspace(pa.mina, pa.maxa, pa.sa); % asset
y = [.2468 .4473 .7654 1.3097 2.3742];
theta = [0 0.514];

k = linspace(pa.mink, pa.maxk, pa.sk); % k

% solve the VF and PF
VFI