Abstract¶
This paper develops a two-asset consumption-savings model and serves as the documentation of an open-source implementation of methods to solve and simulate it in the HARK toolkit. The model represents an agent who can save using two different assets---one risky and the other risk-free---to insure against fluctuations in his income, but faces frictions to transferring funds between assets. The flexibility of its implementation and its inclusion in the HARK toolkit will allow users to adapt the model to realistic life-cycle calibrations, and also to embedded it in heterogeneous-agents macroeconomic models.
This paper develops a two-asset consumption-savings model and serves as the documentation of an open-source implementation of methods to solve and simulate it in the HARK toolkit. The model represents an agent who can save using two different assets---one risky and the other risk-free---to insure against fluctuations in his income, but faces frictions to transferring funds between assets. The flexibility of its implementation and its inclusion in the HARK toolkit will allow users to adapt the model to realistic life-cycle calibrations, and also to embedded it in heterogeneous-agents macroeconomic models.