Behavior of capital

 

We set the function of fc in general using parameter matrix paras that consists of

 

Ai and Qi for aggregate model and theta only for non-aggregate model.

 

That is, we set

 

fc(K,K1,paras)=paras[.,1]*K^alpha-(K1-(1-delta)*K)/paras[.,2]

 

for aggregate model.

 

We can also set

 

fc(k,k1,theta)=paras*A*k^alpha+(1-delta)*k-k1

 

for non-aggregate model. Here, paras is a vector and it was theta.

 

We have to modify the program inside the procedure when we call the function fc.