Determinacy in 2nd Aproximation

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Determinacy in 2nd Aproximation

Postby bigbigben » Sat Aug 11, 2007 7:52 pm

I am just curious about how to set up the criterion for indeterminacy in a 2nd order approximation. I know we can look at the number of controls and number of explosive engenvalues, but how to do it in a 2nd order system. For example, If we have

c(t+1)=a11*c(t)+a12*k(t)+b11*c(t)^2+b12*k(t)^2
k(t+1)=a21*c(t)+a22*k(t)+b21*c(t)^2+b22*k(t)^2

How many controls do we have and how many eigenvalues do we have?
bigbigben
 
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Re: Determinacy in 2nd Aproximation

Postby StephaneAdjemian » Fri Aug 17, 2007 8:22 am

Blanchard and Kahn conditions are conditions for local determinacy. They are defined from the first order approximation of the model.

Best,
Stéphane.

bigbigben wrote:I am just curious about how to set up the criterion for indeterminacy in a 2nd order approximation. I know we can look at the number of controls and number of explosive engenvalues, but how to do it in a 2nd order system. For example, If we have

c(t+1)=a11*c(t)+a12*k(t)+b11*c(t)^2+b12*k(t)^2
k(t+1)=a21*c(t)+a22*k(t)+b21*c(t)^2+b22*k(t)^2

How many controls do we have and how many eigenvalues do we have?
StephaneAdjemian
 
Posts: 429
Joined: Wed Jan 05, 2005 4:24 pm
Location: Paris, France.


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