Stability conditions

Updated: Aug 20, 2021

The conditions for a system to tend to revert to its original position after a disturbance. The process of convergence may involve fluctuations, and the equilibrium state to which a system reverts may itself be a stationary state, a steady-state growth path, or some form of limit cycle. Where a system can be described by a set of linear equations, the stability conditions for a linear difference equation system are that all characteristic roots be less than 1 in absolute value; in a linear differential equation system the stability conditions are that all chciracteristic roots have a negative real part.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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