Analyze the dynamic path - difference equation, Mathematics

Assignment Help:

One of the well-known class of models that involve a simple difference equation are models of mean reversion. These models typically take the form

yt+1 - yt = -a(yt - μ)where 0 < a< 1

In the equation above μ is the mean of yt.

a) Provide the intuitive explanation for the above equation.

b) Show homogenous, particular and then general solution for the difference equation.

c) Setting t=0 show the solution to the mean-reversion model.

d) Analyze the dynamic path of this model.


Related Discussions:- Analyze the dynamic path - difference equation

Find the value of given equations in polynomial , If α & ß are the zeroes ...

If α & ß are the zeroes of the polynomial 2x 2 - 4x + 5, then find the value of a.α 2 + ß 2   b. 1/ α + 1/ ß  c. (α - ß) 2 d. 1/α 2 + 1/ß 2    e.  α 3 + ß 3 (Ans:-1, 4/5 ,-6,

Proof of root test - sequences and series, Proof of Root Test  Firstly...

Proof of Root Test  Firstly note that we can suppose without loss of generality that the series will initiate at n = 1 as we've done for all our series test proofs.  As well n

What is transitive relations:, R is called as a transitive relation if (a, ...

R is called as a transitive relation if (a, b) € R, (b, c) € R → (a, c) € R In other terms if a belongs to b, b belongs to c, then a belongs to c.         Transitivity be uns

Examples on log rules, Examples on Log rules: Example:      Calculate...

Examples on Log rules: Example:      Calculate (1/3)log 10   2. Solution: log b n√A = log b A 1/n = (1/n)log b A (1/3)log 10 2 = log 10 3 √2 = log 10 1.

Miss, how do you find the average of a number

how do you find the average of a number

Function that computes the product of two matrices, Write a function that c...

Write a function that computes the product of two matrices, one of size m × n, and the other of size n × p. Test your function in a program that passes the following two matrices t

Hcf, the length of three pieces of ropes are 140cm,150cm and 200cm.what is ...

the length of three pieces of ropes are 140cm,150cm and 200cm.what is the greatest possible length to measure the given pieces of a rope?

Linear Equations, y= -3x tell if it is linear or not. our teacher wants it ...

y= -3x tell if it is linear or not. our teacher wants it graphed or something.

Calculate combinations and permutations, a. Cassie has seven skirts, five b...

a. Cassie has seven skirts, five blouses, and ten pairs of shoes. How many possible outfits can she wear? b. Cassie decides that four of her skirts should not be worn to school.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd