The VFI Toolkit can now solve Finite Horizon Value Function Problems! This is done using the command ValueFnIter_Case1_FHorz (there is as yet no corresponding Case2). Common examples of such problems include many Discrete Choice Dynamic Programming problems.

The most exciting aspect of this command is that it automatically recognizes which parameters are age-dependent (row vectors) and which are age independent (scalars, a single number). Internally the toolkit acts accordingly when passing the parameter value to the return function.

The required inputs are very similar to those for the infinite horizon value function iteration command with the addition of the number of periods, N_j.

An example, solving a basic ten-period consumption savings problem where income is a combination of a deterministic age-dependent component and a stochastic component is provided. A description of the model being solved by the codes can be found in the Documentation (see Examples>Finite Horizon Stochastic Consumption-Savings Model).

For more details on the use of the command, it’s inputs, outputs, and internal options see the VFI Toolkit Documentation.