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The moving equilibrium theorem again

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  • Schlicht, Ekkehart

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 Moving Equilibrium Theorem states that such an analytic procedure leads to correct conclusions if the movement of the fast variables is indeed sufficiently fast. The purpose of this paper is to present a simple direct proof of the theorem for the linear case.
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  • Schlicht, Ekkehart, 1997. "The moving equilibrium theorem again," Economic Modelling, Elsevier, vol. 14(2), pages 271-278, April.
    • Handle: RePEc:eee:ecmode:v:14:y:1997:i:2:p:271-278
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    1. Schlicht, Ekkehart, 1997. "The moving equilibrium theorem again," Economic Modelling, Elsevier, vol. 14(2), pages 271-278, April.
    2. Ekkehart Schlicht, 1990. "Local aggregation in a dynamic setting," Journal of Economics, Springer, vol. 51(3), pages 287-305, October.
    3. Eckalbar, John C., 1985. "On the use and misuse of the instantaneous speed of adjustment assumption," Economic Modelling, Elsevier, vol. 2(1), pages 3-7, January.
    4. Schlicht, Ekkehart, . "Isolation and Aggregation in Economics," Monographs in Economics, University of Munich, Department of Economics, number 3, November.
    5. Schlicht, Ekkehart, . "Die Methode der Gleichgewichtsbewegung als Approximationsverfahren," Chapters in Economics,, University of Munich, Department of Economics.
    6. Lindbeck, Assar, 1976. " Approaches to Exchange Rate Analysis-An Introduction," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 133-145.
    7. Schlicht, Ekkehart, 1992. "Marshall, Keynes, and Macroeconomics," Munich Reprints in Economics 11055, University of Munich, Department of Economics.
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    Cited by:

    1. Schlicht, Ekkehart, . "Grundlagen der ökonomischen Analyse," Monographs in Economics, University of Munich, Department of Economics, number 25821, November.
    2. Ekkehart Schlicht, 2005. "Hiring Standards And Labour Market Clearing," Metroeconomica, Wiley Blackwell, vol. 56(2), pages 263-279, May.
    3. Schlicht, Ekkehart, 1997. "The moving equilibrium theorem again," Economic Modelling, Elsevier, vol. 14(2), pages 271-278, April.
    4. Schlicht, Ekkehart, 2003. "Estimating Time-Varying Coefficients With the VC Program," Discussion Papers in Economics 34, University of Munich, Department of Economics.

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    More about this item

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling

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