Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
0 of .
Results for:
P. 1
Difference Equations

# Difference Equations

Ratings: (0)|Views: 57 |Likes:

### Availability:

See more
See less

04/07/2013

pdf

text

original

I
NTERMEDIATE
M
ETHODS
:D
IFFERENCE
E
QUATIONS

D
IFFERENCE
E
QUATIONS
Not a whole lot of theory, really.
Difference Equations are concerned with DISCRETEchanges in a variable over time.
Differential equations were a continuous change, differenceequations look at data which is reported only once a timeperiod.
For example, lags
if you had a lagged variable in a model,then it·s rate of change over time would be modelled by adifference equation.
A typical difference equation looks like:
Y
t
= a + b
Y
t-1
We call such a difference equation a first orderdifference equation because it only goes back oneperiod.

D
IFFERENCE
E
QUATIONS
Primarily Concerned with two types of DifferenceEquation, homogenous and non-homogenous.
Pretty much the same definition as homogenous+ non-homogenous Dif. Equations.
Homogenous:
y
Y
t
= b
Y
t-1
y
A.k.a, ¶a = 0·
Non ² Homogenous:
y
Y
t
= a + b
Y
t-1