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

Distinction between charasteristics of private and public, Use the distinct...

Use the distinction between the charasteristics of private and public goods to determine whether the following should be produced through the market system or provided by the gover

Calculate the income elasticity and good , Due to the recent downturn in e...

Due to the recent downturn in economic activity, Taz, has seen his hours at work reduced. He used to work 30 hours a week at $13 and hour, but now he works 22 hours. Due to this

Overnight rates and interest rates with longer maturity, Q. Overnight rates...

Q. Overnight rates and interest rates with longer maturity? By controlling overnight interest rates, central bank will affect interest rates with longer maturity. Main reason f

Augmented phillips curve, Q. Augmented Phillips curve? Remember that Ph...

Q. Augmented Phillips curve? Remember that Phillips curve, as it was incorporated into the Keynesian model, presumed a stable relationship between wage inflation andunemploymen

Macroeconomics policy, explanations to the short-run fluctuation and pilicy...

explanations to the short-run fluctuation and pilicy prescriptions of the schools macroeconomics thought

The crowding out effect, what goals and policies are being discused to addr...

what goals and policies are being discused to address the crowding out effect?

Calculate the equilibrium price and quantity, Question 1: What is the equi...

Question 1: What is the equilibrium price and quantity? Question 2: How do you describe the market situation, if the market price is higher than the equilibrium price? Qu

Command economy, define history and full deatil of command economy

define history and full deatil of command economy

Elucidate elasticity of supply using the midpoint formula, An attorney supp...

An attorney supplies 40 hours of work per week when her fee is $100 per hour but supplies 60 hours of work per week when her fee rises to $120 per hour. Using the midpoint formula,

Example of fixed investment-accounting system, Example of Fixed Investment-...

Example of Fixed Investment-ACCOUNTING SYSTEM   Consider again the economy in example III. An inventor offers to construct some machines for each of the three companies which wo

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