On the Stability of Equilibrium for a Foreign Trade Model

Ioannis K. Dassios and Charalambos P. Kontzalis


Mathematical Modelling, Foreign trade model, Difference Equations


In this paper we study the stability of equilibrium for a foreign trade model. Under this new approach we introduce some kind of memory into the system. Actually, we investigate the special case of three countries and assume that national income equals consumption outlays plus net investment plus exports minus imports. Then, delayed difference equations of third order are employed to describe the model while the respective solutions of third order polynomial correspond to the typical observed business cycles of real economy. Stability conditions are investigated while numerical examples provide further insight and better understanding.

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