Comparative Static Analysis of General Function Models推荐.pdfVIP

Chapter Com parative-Static Analysis of General- Function Models The study ofpartiai derivatives has enabled us, in Chap. 7, to handle the simpler t)fpe of comparativc~static problems, in which the equilibrium solution of the model nm be explic- itly stated in the reduced form. In that casc, partial ditferentiation of the solution will directly yield the desired compamtive-static information. You will recall that the definition of the partial derivative requires the absence of any functional relati()n.~hip among the independent variables (say, x;), so that XI can vary without affecting the values of xz. Xj, Xn . As applied to comparative-static analysis, this means that the parameters and/or exogenous variables which appear in the reduced-form solution must he mutually indepen- dent. Silicc these are indeed defined a~ predclennined data for purposes of the model, the possibility of their mutually affecting one another is inherently ruled out. The procedure of partial differentiation adopted in Chap. 7 is therefore fully justifiable. However, no sueh expediency should be expected when, owing t(l the inclusion of gen- eral functions in a model. no explicit reduced-form solution can be obtained. In sueh cases, we will have to find the- comparative-stalic derivatives directly from the originally given equations in the model. Tuke, lor instance, a simple national·income model with two endogenous variables Yand C: Y=C+J1J+Gn