ECN115

G. Renshaw ch.19 (continued)

Matrix Algebra
• determinants
• symmetric
• inverse
• solving equations with the help of matrices
• Cramer's rule
• macroeconomic example
• input-output analysis example

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 Symmetric
A matrix with the same number of rows and columns is called square matrix

Determinants

Minors (sub-matrices): M11, 𝑀12, 𝑀13

+ 𝑀11 , - 𝑀12 , + 𝑀13 : signed minors, or cofactors 2
Rules of determinants

!!! Only square matrices can have determinants !!!

The determinant of A, written as det. A, or |A|, is defined as ad − cb.
If |A| = 0, the matrix A is said to be singular.

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 Inverse
A matrix with the 1’s along the main diagonal and 0’s elsewhere is called an Identity matrix I
Given matrix A, if there exists a matrix X such that AX=XA=I then we say that X is an inverse of A
!!! Only square matrices can have inverses !!!

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 Calculating the Inverse
We need the determinant and the adjoint
The determinant can be calculated along any given row or any given column
The adjoint requires initially the identification of the minors, the signed minors, that is the cofactors and the
transpose of the signed minors / cofactors

Example

Minors

Signed Minors

Cofactors

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 Calculating the Inverse
We need the determinant and the adjoint
The determinant can be calculated along any given row or any given column
The adjoint requires initially the identification of the minors, the signed minors, that is the cofactors and the
transpose of the Signed Minors / Cofactors

Evaluated Cofactors matrix

Transpose of Cofactors/Signed Minors

The determinant calculated along the 1st row is

The Inverse A-1 then is given by

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Properties of the Inverse

Solving Equations by Matrix Inversion

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Solving Equations by Matrix Inversion

Example

Assume

Then as Ax = b

What we are after is A-1 A x = A-1 b  I x = A-1 b  x = A-1 b

The inverse A-1 from the previous example we know that it is

Therefore

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Cramer's Rule

Example

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Solving Equations by Matrix Inversion

A macroeconomic example

Assume or

Then as Ax = b and

What we are after is A-1 A x = A-1 b  I x = A-1 b  x = A-1 b

The inverse A-1 from the previous example we know that it is

Therefore

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Solving Equations by Matrix Inversion

An input-output analysis example

Assume

Then as (I – A) x = c

What we are after is (I – A)-1 A x = (I - A)-1 c  I x = (I - A)-1 b  x = = (I - A)-1 c

The inverse (I – A)-1 will be given firstly by the adjoint D’ and the determinant of (I - A) = 0.168

Therefore and assuming the elements of vector c are, 10, 15 and 6

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 Study:
from G. Renshaw’s ch. 19.9-.15,

 Attempt:
all relevant progress exercises

 for next week’s class/seminar prepare the so-called tutorial exercises

 for next week’s teamwork prepare & upload the so-called project
exercises

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