Stability of the adjustment process with the difference between the weighted average and the actual value

Takeshi Ogawa ()
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Takeshi Ogawa: Nagoya University

Economics Bulletin, 2010, vol. 30, issue 4, 3010-3017

Abstract: In this paper, we show a similar concept of stability of the adjustment process concerning the difference between the weighted average and the actual value. Because the adjustment process includes only one eigenvalue of zero, and thus one dimension of freedom, it is difficult to apply the Routh-Hurwitz theorem to the process, at least directly. To solve the one-dimensional freedom, we fully apply Goodwin's analysis of the weighted average. One-dimensional freedom is suitable for indeterminacy issues, or the characterization of price and the like, which has only relative value and no absolute value. From this analysis, we know that it is reasonable to be concerned about the difference between the average and the actual value.

Keywords: Linear approximation system; Weighted average; Hicksian matrix; Linear approximation stable except choosing the absolute value (search for similar items in EconPapers)
JEL-codes: C6 P2 (search for similar items in EconPapers)
Date: 2010-11-11
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