Dear Robert,
I am trying to check the life-cycle path for consumption and the marginal utility of consumption in the Epstein-Zin model, in consumption units. Actually, I want to generate two plots, as in Model 16, based on:
FnsToEvaluate.consumption=@(h,aprime,a,z,agej,Jr,w,kappa_j,r,pension) (agej<Jr)*(w*kappa_j*z*h+(1+r)*a-aprime)+(agej>=Jr)*(pension+(1+r)*a-aprime);e code here
FnsToEvaluate.marginalutilityofcons=@(h,aprime,a,z,agej,Jr,w,kappa_j,r,pension,sigma) ((agej<Jr)*(w*kappa_j*z*h+(1+r)*a-aprime)+(agej>=Jr)*(pension+(1+r)*a-aprime))^(-sigma); % u(c)=(c^(1-sigma))/(1-sigma), therefore u'(c)=c^(-sigma).
I can generate the plot for consumption for the specification I am using. However, I am not able to generate the plot for the marginal utility of consumption. In model 16, you use u′(c) = c^(−sigma). I am using Epstein-Zin preferences in consumption units, and I am not sure how to define u′(c) in this case. Could you please help me with this issue?