Redo the preceding exercise, this time assuming that = 0.2. Preceding Exercise Consider the following model
Question:
Redo the preceding exercise, this time assuming that λ = −0.2.
Preceding Exercise
Consider the following model of wage adjustment in the labor market:
where We is the equilibrium wage rate, and λ is a positive parameter. If λ = 0.6, is the model monotonically stable, cyclically stable, monotonically unstable, or cyclically unstable? Explain why your answer makes sense logically.
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Related Book For
Essential Statistics Regression And Econometrics
ISBN: 9780123822215
1st Edition
Authors: Gary Smith
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