Body of this Matlab function works, but not the function itself (interp1 error) - matlab

Question

I've written the following piece of subcode (with parameters commented) for an Euler policy iteration algorithm. When I try to run the body of the function (everything below global) for say, a1 = 1, it works, and returns a scalar. However, when I call the function as euler_diff_test(1), I get an error. (Pasted below)
function diff = euler_diff_test(a1)
%the following comments are example parameters. They are in the global line originally.
% r = 0.2, a = 0.5, y = 1.1, a_grid = linspace(0.5,7,100)
%policy_guess = zeros(2,N);
%policy_guess(1,:) = 0.3*a_grid;
%policy_guess(2,:) = 0.3*a_grid;
% M = zeros(2,2); %M for markov transition kernel
% M(1,1) = p;
% M(2,2) = p;
% M(2,1) = 1-p;
% M(1,2) = 1-p;
% j = 1
global r a y a_grid policy_guess M j;
c = (1+r)*a + y - a1; %consumption formula
if c<=1e-02 %don't care about consumption being negative
diff = 888888888888888888888;
else
policy_func = interp1(a_grid', policy_guess', a1, 'linear');
diff = 1/c - beta*(1+r)*(1 ./ policy_func)*M(j,:)';
end
end
Error Reads:
Any help is much appreciated!

Answer 1

The problem is that you dont understand globals nor how they work!
You seem to be doing something like:
N=100; p=0.1;
r = 0.2, a = 0.5, y = 1.1, a_grid = linspace(0.5,7,100)
policy_guess = zeros(2,N);
policy_guess(1,:) = 0.3*a_grid;
policy_guess(2,:) = 0.3*a_grid;
M = zeros(2,2); %M for markov transition kernel
M(1,1) = p;
M(2,2) = p;
M(2,1) = 1-p;
M(1,2) = 1-p;
euler_diff_test(1)
And this is causing the error you show. Of course it is!
First, you need to learn what a global is and what worskpaces are. Each fucntion has its own worskpace or "scope". That means that only variables defined within the workspace are visible by the function itself.
A global variable is one that exist for all workspaces, and everyone can modify it. You seem to want all those variables defined outside the function, inside your function. But realise! when the variables are defined, they are not global. The function starts, and in its first line, it does only know about the existence of a1. Then, later, you define a bunch of variables as global, that the function did not know about. So what does the function do? just create them empty, for you.
If you want your the variables that you create in the main script scope to be global, you need to declare them as global then, not inside the function. So cut your line global ... from the fucntion, and put it on top of the script where you declare all your variables, i.e. on top of
% here!
N=100; p=0.1;
...
in my example.
Now, the important stuff: Global variables are bad. When you have globals, you don't know who modifies, and its super easy to lost track of what is happening to them, because every function that uses a variable a will modify the global a, so its a pain to debug. Almost no one uses globals because of this. The best way is to pass them to the function as input, i.e. define your function as:
function diff = euler_diff_test(a1,r, a, y, a_grid, policy_guess, M, j)