RiKiK hkmi

2 D»c characteristic equation is

Multiplying by 2 an J using ihc quadratic formula. the characteristic roots arc r, - f,- -2.765

I -3-<-7235) -I -0.5( -7.235) 11 C| 1 14.233 16175 lie, I l-2-(-7235) -4-(-7.235) He,] " |5^5 3.235 JUJ "

4235c, 4 2.6175c,-0 c,- -1 62c, lie, ■!.<■,• -1.62. and For r, • -2.765.

[ -3-(-1765) -1 -OS«-2.765) lie, I I -0.235 03*25 lie,] I -2 -(-2765) -4-(-27651 \\c:\~ | 0765 -IJ35 II o J

The complete complementary (unction, then. »

4. llic particular integral Y A j1 B is and the general solution is

,V»(0 ■ A,e"*"m> I 62A.r i"*1* 1 yAfl ■ -tJ6Sk,t'um+k,t'tn* + 2

5. l ung v,(0) ■ 222.y^O) - 3.9 to solve for A, and ft,.

ft, - 5 At • 10 Substituting in II.») for the definite solution.

With both characteristic roots negative. Ihc intertemporal equilibrium is stable

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