Stability Analysis of Large Scale Economic Systems which have a Multi—Time Scale Property
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The problem of controlling large scale economic systems has led to the introduction of the state space forms as an alternative representation of traditional model forms in various theoretical and empirical studies of dynamic economic systems, especially in the application of optimal decision rules for macroeconomic planning and policy models. The application of optimal control techniques to macroeconomics has demonstrated the potential of optimal control theory for macroeconomic growth theory, development and stabilisation (Shell (1967), Kendrick and Taylor (1970), Dobell and Ho (1967)). To open up the field of econometric modelling to the techniques of optimal control econometric models, in either structural, reduced or final form, have usually been translated into state space form; see for example Preston and Wall (1973).
KeywordsInterconnected System State Space Form Degenerate System Time Scale Separation Optimal Decision Rule
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