Macro3Discrete Time Dynamic System a Technical Preparation宏观经济学(南开大学,龚刚).pptVIP

Lecture 3Discrete Time Dynamic System: a Technical Preparation Macroeconomics Why Dynamic Analysis is Important? We have known that macroeconomics is about how macroeconomic variables are determined. In macroeconomics, such a determination can often be described by a dynamic system in terms of either discrete time or continuous time. II. The Discrete Time Dynamic System Let Xt, Yt, …, Zt are respectively the different variables at period t. Then their determination might be described by the following dynamic system, which is in discrete time: II. The Discrete Time Dynamic System If function f(·), g(·), …, h(·) are all linear, the above system may be written as where aij and bi (i,j = 1,2,…,n) are all the parameters. II. The Discrete Time Dynamic System The standard form of dynamic system Note that (3.1) and (3.2) can be regarded as a standard form of discrete dynamic system. Other forms of dynamic system can be transformed into the standard form (examples are provided in the textbook) Many theorems (propositions) to resolve the dynamic system is based on the standard form. III. The Solution Path and the Steady State The solution path The solution of a system describe how the variables change over time given the initial condition (X0, Y0, …,Z0). III. The Solution Path and the Steady State The solution path (continued) The graphic representation of solution paths III. The Solution Path and the Steady State The steady state The steady state of system (3.1) or (3.2), denoted as (X*, Y*, …, Z*), can be obtained by posing the restriction: III. The Solution Path and the Steady State The steady state (continued) The steady state has the property that if the solution path of the system is convergent, it must be converge to the steady state (see the following graph) III. The Solution Path and th