Unformatted text preview: whereas .75, .9, and .95 initially have a positive slope and then goes down to zero like the others. As rho increased, maximum output level also increased and the affects of the shock lasted longer “CONSUMPTION” Diagram:-For all Rho observed, as rho increased, maximum output level also increased and the affects of the shock lasted longer. For Rho equal to 0, the slope was negative for all the domain and for all the others, slope was initially positive and then negative. “CAPITAL” Diagram:-For all rho, it begins with a positive slope and then a negative slope as it approaches zero. As Rho increases, maximum output increases and the time to return to the steady state increases. The initial slope is greater for smaller values of rho which means as rho increases, the shock has a slower affect on capital. “TECHNOLOGY” Diagram:-As Rho increases, the absolute value of the slope decreases. Note: all shocks began at one regardless of rho as anticipated....
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- Spring '10
- Macroeconomics, Negative and non-negative numbers, Plus and minus signs