The Market Resources Method for Solving Dynamic Optimization Problems
15 Pages Posted: 28 Jun 2016 Last revised: 3 Jun 2017
Date Written: June, 2016
We introduce the market resources method (MRM) for solving dynamic optimization problems. MRM extends Carroll?s (2006) endogenous grid point method (EGM) for problems with more than one control variable using policy function iteration. The MRM algorithm is simple to implement and provides advantages in terms of speed and accuracy over Howard?s policy improvement algorithm. Codes are available.
JEL Classification: C6, C61, C63, C68
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