Economics Dynamics Problems 114

Economics Dynamics Problems 114 - 98 Economic Dynamics...

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Unformatted text preview: 98 Economic Dynamics Figure 3.9. Example 3.1 yt+1 = 2yt − y2 t The fixed points can be found from a = 2 a − a2 a2 − a = 0 a(a − 1) = 0 a=0 and a=1 To establish stability, let y = f (x) = 2x − x2 then f (x) = 2 − 2x f (0) = 2 and f (1) = 0 Since f (0) > 1 then a = 0 is unstable Since f (1) < 1 then a = 1 is stable Example 3.2 yt+1 = 3.2yt − 0.8y2 t ...
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This note was uploaded on 12/14/2011 for the course ECO 3023 taught by Professor Dr.gwartney during the Fall '11 term at FSU.

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