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Steady state properties of multi‐state economic models
Author(s) -
Tsur Yacov,
Zemel Amos
Publication year - 2017
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12267
Subject(s) - simplicity , steady state (chemistry) , simple (philosophy) , stability (learning theory) , state space , state function , function (biology) , state (computer science) , space (punctuation) , computer science , mathematical optimization , mathematics , algorithm , physics , thermodynamics , chemistry , philosophy , statistics , epistemology , quantum mechanics , machine learning , evolutionary biology , biology , operating system
A simple method to derive optimal steady states of multi‐state dynamic economic systems with minimal assumptions on the underlying processes is developed. This is accomplished by an n ‐dimensional function defined over the n ‐dimensional state space in terms of the model's primitives. The location and stability properties of optimal steady state candidates are characterized by the roots and derivatives of this function. A resource management example illustrates the simplicity and applicability of the method.