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

Long run imports will most likely be paid, In the long run, imports will mo...

In the long run, imports will most likely be paid for with: a. Aexports. b. The sale of real and financial assets. c. the extension of credit. d. higher domestic unempl

Describe a hypothetical ideal, Design a hypothetical ideal randomized contr...

Design a hypothetical ideal randomized controlled experiment to study the effects on highway traffic deaths of wearing seat belts. Suggest some impediments to implementing this exp

Testing the hypothesis, An effort to reduce energy costs, a major universit...

An effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room

Relation among opportunity cost and production possibilities, How does Oppo...

How does Opportunity cost and production possibilities relate?

Major brokerage firm advised, Suppose a major brokerage firm advised its cl...

Suppose a major brokerage firm advised its clients to buy cigarette stocks under the assumption that, if consumer incomes rise by 50% as expected over the next decade, cigarette sa

System of private property rights, A system of private property rights A...

A system of private property rights A. enhances economic growth by creating incentives to the Fed to maintain stable prices. B. enhances economic growth by increasing the pro

How central bank increases the target rate, How central bank increases the ...

How central bank increases the target rate Let's say that the central bank increases the target rate. When the target rate increases, the central bank needs to raise the overni

What are the macroeconomic variables, Macroeconomics usually deals with the...

Macroeconomics usually deals with the behaviour of aggregates of economic variables. An economic variable is a magnitude whose value may changes. Important variables in macroeconom

Why do some countries have a high real per capita income, Why do some count...

Why do some countries have a high real per capita income? High standard of living within the industrialized nations consider to be largely because of the high productivity of

How big is buffer-caesar saladis, 1.  You are managing a breakfast and lunc...

1.  You are managing a breakfast and lunch only restaurant that sells all-inclusive plated meals (i.e. all lunches include any protein or hot foods as well as salads and sides on a

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