Using a different method colleagues different solution, Macroeconomics

Assignment Help:

Consider the following homogenous difference equation:
xt=b0+b1xt-1

a) Iterate backwards xt can be written in terms of xt-2.

b) Now show xt can be written in terms of xt-3 and xt-4, respectively.

c) Assuming that you know a particular value of x in the past %u2013 x0 %u2013 write down the solution for xt in terms of x0.
bra

d) One of your colleagues obtained a different solution using a different method:
xt=b0/(1-b1)+bt1[x0-b0/(1-b1)]

Demonstrate using alegbra that the two solutions are identical if I b1 I < 1.

e) Show that if b1 = 1, the solution in (c) is equivalent to xt = b0*t + x0. How do you interpret the behavior of x in this case? How does the behavior of x differ from the case in (d), when | b1 |< 1?


Related Discussions:- Using a different method colleagues different solution

Explain the long-run phillips curve, Q. Explain the long-run Phillips curve...

Q. Explain the long-run Phillips curve? The long-run Phillips curve The augmented Phillips curve has an important consequence: the long-run Phillips curve must be vertical

Input combination if the price of capital decreased, In reference to the ab...

In reference to the above question, assume you know the combination of inputs that minimizes cost. What would happen to this input combination if the price of labor increased? What

Staic general equilibrium model, given the consumer maximizing problem subj...

given the consumer maximizing problem subjest to consumption, the firm''s maximizing problem subject to revenue as a function of labour demand, and the government''s budget as G=T.

Macroeconomic Analysis, Derive the conditions for steady state in the Solow...

Derive the conditions for steady state in the Solow model. What are its implications? In what respects is the golden rule different from the steady state?

#titleINTERNATIONAL TRADE., WHAT ARE THE TYPES OF PROTECTIONISM IN INTERNAT...

WHAT ARE THE TYPES OF PROTECTIONISM IN INTERNATIONAL TRADE

Explain the economic functions of money - a unit of account, Explain the Ec...

Explain the Economic functions of money - A unit of account In a monetary economy, all prices may be expressed in monetary units which everyone may relate to. Without money,

Find the break-even point, The Widget Manufacturing Company must replace a ...

The Widget Manufacturing Company must replace a widget machine, and is evaluating the capabilities of two systems. A requirement of management is that the machine chosen must be p

Explain negatively impacted productivity of the project, Describe your most...

Describe your most positive experience in working on a group project in which the group's cohesiveness led to greater work productivity. Have you experienced a situation that was j

Component of balance payments, Component of balance payment: BOP is a ...

Component of balance payment: BOP is a statement  that summarises all the economic transactions between residents (individuals, companies and other organisations) of the home

Financial Crises, #question. BANK Z (@ 10% RR) ASS...

#question. BANK Z (@ 10% RR) ASSETS LIABILITIES RR: K200,000 Deposits : K2,000,000 ER : K1,800,000 You are given the above Balance sheet for Bank Z as

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