Have just updated the VFI Toolkit to version 1.2. It is a minor change and breaks compatibility with version 1.1. The minor change is in the ordering of inputs for the main VFI Toolkit commands. The change to v1.2 sees the release of the command HeteroAgentStationaryEqm_Case1 (and Case2) for easy computing of the general equilibrium of Bewley-Huggett-Aiyagari models. It will also see the release of the command TransitionPath_Case1 (and Case2) for easy computing of the general equilibrium transition path between stationary equilibria of Bewley-Huggett-Aiyagari models.

In terms of the inputs for the main VFI Toolkit commands, vfoptions has now been moved to the end of the inputs for ValueFnIter_Case1 (and Case2). This makes it easier to not input any vfoptions at all and simply use the default settings. The change is minor, but does break backward compatibility, hence the change to v1.2.

The computation of general equilibrium incomplete market heterogeneous agent models with idiosyncratic (but no aggregate) shocks is facilitated by the release of the HeteroAgentStationaryEqm_Case1 (and Case2) commands. As well as specifying the same inputs needed for solving the value function (such as the return function) you will also have to input the market clearance conditions and the formulae for any aggregate variables needed as part of evaluating market clearance. Example codes for the model of Aiyagari (1994) are provided, solving the model and generating various output based on the solution.

All of the toolkit examples and replications have been updated to work with this version. Looking at these is the best way to see how this works.

It is hoped that this update of the VFI Toolkit will make using Bewley-Huggett-Aiyagari models much easier.