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2019 | OriginalPaper | Chapter

9. Dynamic Modelling

Author : Kam Yu

Published in: Mathematical Economics

Publisher: Springer International Publishing

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Abstract

In this chapter we extend economic modelling to include the time dimension. Dynamic modelling is the essence of macroeconomic theory. Our discussions provide the basic ingredients of the so-called dynamic general equilibrium model.

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previous chapter Probability

Orbits are often called trajectories or flows.

Boyd (2008) provides a detailed analysis of linear dynamical systems.

See also Conrad (2010, p. 55).

Theorem 9.2 applies to asymmetric linear functions as well. See Devaney (2003) or Hasselblatt and Katok (2003, Chapter 3) for details.

See, for example, Economist (2011).

Some authors prefer writing π _t as a row vector so that the transition equation is π _t+1 = π _t P. Others define the transition matrix P as the transpose of what we specified in Eq. (9.28), consequently the transition equation is π _t+1 = P π _t.

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