Approximation by Moving Equilibrium

Ekkehart Schlicht

from University of Munich, Department of Economics

Abstract: The analysis of multivariate dynamical models can sometimes be considerably simplified by the assumption that one or several variables move infinitely fast to their equilibrium values. The method is known as the ‘moving equilibrium method’. Various dynamical theories that build on equilibrated markets presuppose the validity of this method. The method is discussed and a theorem -- the moving equilibrium theorem -- is provided that establishes the validity of the approximation in the linear case.

Keywords: Moving equlibrium; temporary equilibrium; dynamical systems; successive approximation (search for similar items in EconPapers)
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