The grid search method has often been used to solve models with default risk because the complexity of the problem prevents the use of more efficient but less general tools. In this paper, we propose an extension of the endogenous grid method for default risk models in which price schedules are...

How do defaults and bankruptcies affect optimal health insurance policy? I answer this question,using a life-cycle model of health investment with an option to default on emergency room(ER) bills and financial debts. I calibrate the model to the U.S. economy and compare the optimalhealth...

Default risk models have been widely employed to assess the ability of households and sovereigns to insure themselves against shocks. Grid search has often been used to solve these models because the complexity of the problem prevents the use of faster but less general methods. In this paper, we...