interp2 interpolating in one dimension??

Hi,

I am calling interp2 inside a function of fminsearch and the vector that is returned seems to be interpolating in one dimension as it should (answers are over the grid of [1,40]) while in the other dimension its giving values that are pretty much all at 1 even when the grid is over [1,40]. Is this a general issue that someone can give advice on how to resolve or should I paste my code for others to replicate?

[Walter Roberson]

Code please.

[J]

main m.file

clear all;
close all;
clc;
tic

global v0 vv0 beta delta alpha eta kmat k00 s kgrid Agrid gamma r p mmat m00 mgrid pmat l 

%no. of firms
J=4;
r=0.5;

% set parameters
alpha = 0.2; % capital's share
beta = 0.9;
delta = 0.1; % depreciation rate (annual)
gamma=0.2;
eta=0.5;
s = 3;
tol = 0.1;
maxits =25;
dif=tol+1000;
dif1 = tol+1000;
dif2 = tol+1000;
its = 0;
its1 = 0;

Agrid=[1,1,1,1];

kmat=meshgrid(1:1:25);
mmat=meshgrid(1:1:25);

kmat = kmat';
[JJJJ,N] = size(kmat);

mmat = mmat';
[JJJJ,N] = size(mmat);

v0 = zeros(JJJJ,N);
v1=zeros(J,N);

while dif>tol & its<maxits 
  for j=1:J   
        for i=1:N   
            k00=kmat(i,j);
            m00=mmat(i,j);
            km0=[k00,m00];
            [km1,fval] = fminsearch(@(km) firmvalfn_2cap_rental_noprices(km,j),km0)%,options); 
            v1(i,j) = -firmvalfn_2cap_rental_noprices(km1,j);
            k11(i,j) = km1(1);
            m11(i,j) = km1(2);
        end        
    end
    dif=norm(v1-v0)
    v0 = v1;
end

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

function val=firmvalfn_2cap_rental_noprices(km,j)

% This program gets the value function of firm for a neoclassical growth model 

global pmatt v0 vv0 beta delta p alpha eta k00 kgrid kmat m00 mgrid mmat s k2mat m2mat Agrid gamma  ll 

gg= interp2(kmat(:,j),mmat(:,j),v0,km(1),km(2),'linear');

profit = (Agrid(j)*(k00^alpha)*(m00^alpha))- (km(1)-k00*(1-delta))-(km(2)-m00*(1-delta));

if profit<=0 
    val = -9999999 - 999*abs(profit);
else
val= log(profit)+ beta*gg;
end
val = -val;