Abstract
Change is the essence of economic life. Production, income, prices, money in circulation, exchange rates, and other economic variables are increasing or decreasing all the time. Jobs are created and destroyed, some activities and products disappear, and new ones replace them. On a longer horizon, economic institutions undergo gradual evolution and sometimes abrupt changes. Yet it is rare that we observe a clean break with the past as if yesterday did not exist. The past exerts an influence on the present.
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Notes
- 1.
In general, the solution of an n-th order linear difference equation involves n free parameters.
- 2.
Not all series go as far back as the time of the Big Bang. We have used the notation for generality. If a series starts at time \(t = t_0 ,\) then we can simply write \(x_t = 0,\;\forall t < t_0 \).
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© 2011 Springer-Verlag Berlin Heidelberg
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Dadkhah, K. (2011). Difference Equations. In: Foundations of Mathematical and Computational Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-13748-8_16
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DOI: https://doi.org/10.1007/978-3-642-13748-8_16
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