Blanchard Kahn Condition

EC417_Macroeconomics

Start from a very simple question: why we need B-K condition?

from a Euler Equation in the RBC model:

$$c_t^{-1}=\beta {\mathbb{E}}_t[(1+r_{t+1}-\delta )c_{t+1}^{-1}]$$

The intuition of this equation is your decision today relies on your expectation of tomorrow. The problem is given $c_0$, there could be infinitely many solutions. The Blanchard Kahn Condition allows us to find the unique non-explosive path.

How to understand $p_i$ and ${\lambda }_i$?

• $\lambda$: 各个变量独自的变化率
• $p$: 可以理解为类似于权重

计算特征值可以通过 $\det (D-\lambda I)=0$ 这个公式进行分解