Economics Dynamics Problems 144

Economics Dynamics Problems 144 - 128 Economic Dynamics...

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128 Economic Dynamics instability, and so we take ε to be some ‘small’ distance either side of x 1 or x 2 or x 3 . In order to establish the stability properties of each of the equilibrium points, we take a Taylor expansion of f about x . Thus for a Frst-order linear approximation we have f ( x t 1 ) = f ( x ) + f ± ( x )( x t 1 x ) + R 2 ( x t 1 x ) Ignoring the remainder term, then our linear approximation is x t = f ( x ) + f ± ( x )( x t 1 x ) ±urthermore, we have established that: if ± ± f ± ( x ) ± ± < 1 then x is an attractor or stable if ± ± f
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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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