Stability analysis of asset flow differential equations |
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Authors: | Ahmet Duran |
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Institution: | Department of Mathematics, Istanbul Technical University, 34469 Maslak, Istanbul, Turkey;Department of Mathematics, University of Michigan, Ann Arbor, MI 48109, USA |
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Abstract: | I study the stability analysis of the solutions for the dynamical system of nonlinear asset flow differential equations (AFDEs) in three versions. I show that the previous two versions are not structurally stable mathematically because there are infinitely many critical points. It is important to reformulate a problem in order to eliminate any hypersensitivity in the mathematical model. I find that there is no critical point in the new version unless the chronic discount over the past finite time interval is zero. |
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