I’m trying to use Dynare to solve the simple, deterministic version of the cake eating problem, for example the one described in section 3 of this link: www2.econ.iastate.edu/tesfatsi/d … cooper.pdf
The utility function I’m using is the square root.
I can’t get it to work, but I’m not sure what I’m doing wrong. Any help would be much appreciated!
Here is my code:
- Cake eating problem
beta = 0.9;
(f(-2)-f(-1))^(1/2) = (f(-1)-f)^(1/2)/beta;
f = 10;