Dynamic Programming
We will start this lecture by studying the famous Job Search Model developed by McCall. We will use Sargent and Stachurski’s excellent slides below.
We will then continue with the well known cake eating problem. We showed probably the simplest way to solve for the optimal decision rule, on a discrete grid. We also showed that this can lead to really poor results, so implementation details matter here. We introduced uncertainty and we looked at an Euler Equation solver for a consumption savings problem.
| Topic | Notebook |
|---|---|
| McCall’s Search Model | Sargent+Stachursky Slides Sargent+Stachursky Book notebook |
| Dynamic Programming 1 | download notebook |
| Dynamic Programming 2 | download notebook |
| Endogenous Grid Method (EGM) | download notebook |
| The Shimer-Smith Model | download notebook, rendered notebook |
| The Ayiagari Model | download notebook |
© Florian Oswald, 2026