"Due" date (as in, be ready to discuss what you have done so far): Tuesday, Sep 19.
Yaobin's Comments:
My answers to question 1, 2, and 3 can be found in the m file named "VFI".
The plots for question 2 and 3 are saved in the folder named "plots".
Also in the last part of VFI.m, I simulated the economy with A_h = 1.1 and A_l = 0.678 and got a sequence of A, a sequence of K, and a sequence of Y. Then I calculated the standard deviation of Y.
For calibrating A_h and A_l, I wrote my code in the m file called "Calibration". The basic logic of my calibration is based on the simulation I did in the VFI.m. I ran the calibration multiple times and the results imply that for A_h between 1 to 1.0013 and for A_l between 0.9958 to 1, respectively, the standard deviation of output (Y) is around 2%, which is close to the 1.8% in the US data.