Unformatted text preview: + b t Y Y t = b t ² Y − a 1 − b ³ + a 1 − b Itisclearfromthisresultthatif  b  < 1thentheseriesconvergesontheequilibrium. If 0 < b < 1, there is steady convergence; while if − 1 < b < 0, the convergence oscillates. If  b  > 1, the system is unstable. Case (ii) a k = a and b = 1 for all k In this case Y t = a + Y t − 1 with result Y t = a t − 1 ± k = (1) t − 1 − k + Y i.e. Y t = at + Y...
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 Fall '11
 Dr.Gwartney
 Economics, Convergence, Yt, Dominated convergence theorem, general result

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