diff --git a/CurrentWriting/sections/appedicies/apx_01_MarginalSurvivalRates.tex b/CurrentWriting/sections/apx_01_MarginalSurvivalRates.tex similarity index 100% rename from CurrentWriting/sections/appedicies/apx_01_MarginalSurvivalRates.tex rename to CurrentWriting/sections/apx_01_MarginalSurvivalRates.tex diff --git a/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.pdf b/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.pdf new file mode 100644 index 0000000..c374783 Binary files /dev/null and b/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.pdf differ diff --git a/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.tex b/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.tex new file mode 100644 index 0000000..f62c4be --- /dev/null +++ b/CurrentWriting/sections/apx_02_GeneralizedEuEqSteps.tex @@ -0,0 +1,52 @@ +\documentclass[../Main.tex]{subfiles} +\graphicspath{{\subfix{Assets/img/}}} + +\begin{document} +General Description of Defining Euler Equations with many choice +and state variables. + +Consider the following constrained Bellman Equation: + +\begin{align} + W(\theta_t) =& \max_{x_t} F(\theta_t,x_t) + \beta W(\theta_{t+1}) \\ + \text{Subjet To:}\\ + &\theta_{t+1} = G(\theta_t, x_t) %\\ + %&a \leq x_t \leq b %%TODO: Add this back in later. +\end{align} +Where $\theta_t$ is a $m \times 1$ vector of state variables and +$x_t$ is a $k\times 1$ vector of choice variables. + +The resulting optimality conditions in matrix form are +\begin{align} + [0] =& \underset{k\times 1}{\parder{F(\theta_t,x_t)}{x_t}{} } + + \beta + \underset{k \times m}{\parder{G(\theta_t,x_t)}{x_t}{} } + \cdot + \underset{m\times 1}{\parder{W(\theta_{t+1})}{\theta_{t+1}}{}} \\ + [0] =& \vec f_{x_t} +\beta B_t \cdot \vec W_{\theta_{t+1}} +\end{align} + +Similarly the envelope condations can be written as: +\begin{align} + \underset{m\times 1}{\parder{W(\theta_{t})}{\theta_{t}}{}} + =& \underset{m\times 1}{\parder{F(\theta_t,x_t)}{\theta_t}{}} + + \beta + \underset{m \times m}{\parder{G(\theta_t,x_t)}{\theta_t}{} } + \cdot + \underset{m\times 1}{\parder{W(\theta_{t+1})}{\theta_{t+1}}{}} \\ + \vec W_{\theta_t} =& \vec f_{\theta_t} +\beta A_t \cdot \vec W_{\theta_{t+1}} +\end{align} +If $A_t$ is invertible, it gives the iteration condition +\begin{align} + \vec W_{\theta_{t+1}} =& \beta^{-1} A_t^{-1} + \cdot \left[ \vec W_{\theta_t} - \vec f_{\theta_t}\right] +\end{align} +If $A_t$ is not invertible, you don't have a solution leading to the standard euler equation. +But, assuming it is, we can now begin solving for the Euler Equation. + +The basic approach is to choose enough extra + +The first problem we need to address is dimensionality conserns + + +\end{document}