Collocation method with transition matrices

We continue to consider the aggregate model:

but

for the first group of period of time

for the second group of period of time

.

.

.

for the ns-th group of period of time.

Here, we also change the corresponding parameter A’s and Q’s across breaks.

We set function fc differently in terms of A and Q rather than theta alone.

That is, we set

fc(K,K1,A,Q)=A*K^alpha-(K1-(1-delta)*K)/Q

rather than

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