Divide and conquer with two endogenous states

1

I have an infinite horizon model with 2 endogenous states: the first is a continuous variable (assets), the second has only three points.

To use divide and conquer, can I just set

vfoptions.divideandconquer=1

Or do I also have to set

vfoptions.level1n = [11,??]
?

Thanks!

2

Just
vfoptions.divideandconquer=1
which will be applied only to the first of the two endogenous states.
You can optionally set
vfoptions.level1n=9
which will be understood to apply to the first endogenous state (9 is just an example, the default is max(ceil(n_a(1)/50),5) but this is very rough, I haven’t really figured out a good default, just a half decent one)

[If you do set, e.g., vfoptions.level1n = [11,3], internally it will anyway do vfoptions.level1n=vfoptions.level1n(1);. Although if you set vfoptions.level1n(2)<n_a(2) it will throw an error that it cannot divide-and-conquer both of them.]

1 Like
3

Thanks for the explanation!