@@ -17,19 +17,17 @@ kernelspec:
1717## Introduction
1818
1919
20- This lecture can be viewed as a sequel to {doc}` eigen_I `
20+ This lecture can be viewed as a sequel to {doc}` eigen_I ` .
2121
2222It provides an example of how eigenvectors isolate * invariant subspaces* that help construct and analyze solutions of linear difference equations.
2323
2424When vector $x_t$ starts in an invariant subspace, iterating the different equation keeps $x_ {t+j}$
2525in that subspace for all $j \geq 1$.
2626
27- Invariant subspace methods are used throughout applied economic dynamics, for example, in the lecture {doc}` money_inflation `
27+ Invariant subspace methods are used throughout applied economic dynamics, for example, in the lecture {doc}` money_inflation ` .
2828
2929Our approach here is to illustrate the method with an ancient example, one that ancient Greek mathematicians used to compute square roots of positive integers.
3030
31- In this lecture we assume that we have yet
32-
3331## Perfect squares and irrational numbers
3432
3533An integer is called a ** perfect square** if its square root is also an integer.
@@ -46,11 +44,11 @@ The ancient Greeks invented an algorithm to compute square roots of integers, in
4644
4745Their method involved
4846
49- * computing a particular sequence of integers $\{ y_t\} _ {t=0}^\infty$
47+ * computing a particular sequence of integers $\{ y_t\} _ {t=0}^\infty$;
5048
51- * computing $\lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) = \bar r$
49+ * computing $\lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) = \bar r$;
5250
53- * deducing the desired square root from $\bar r$
51+ * deducing the desired square root from $\bar r$.
5452
5553In this lecture, we'll describe this method.
5654
@@ -90,7 +88,7 @@ equation {eq}`eq:2diff1` for each $t \geq 0$.
9088We seek an expression for $y_t, t \geq 0$ as functions of the initial conditions $(y_{-1}, y_{-2})$:
9189
9290$$
93- y_t = g((y_ {-1}, y_ {-2});t), \quad t \geq 0
91+ y_t = g((y_ {-1}, y_ {-2});t), \quad t \geq 0.
9492$$ (eq:2diff2)
9593
9694We call such a function $g$ a *solution* of the difference equation {eq}`eq:2diff1`.
@@ -110,7 +108,7 @@ For initial condition that satisfy {eq}`eq:2diff3`
110108equation {eq}`eq:2diff1` impllies that
111109
112110$$
113- y_0 = \left(a_1 + \frac{a_2}{\delta}\right) y_ {-1}
111+ y_0 = \left(a_1 + \frac{a_2}{\delta}\right) y_ {-1}.
114112$$ (eq:2diff4)
115113
116114We want
@@ -122,13 +120,13 @@ $$ (eq:2diff5)
122120which we can rewrite as the *characteristic equation*
123121
124122$$
125- \delta^2 - a_1 \delta - a_2 = 0
123+ \delta^2 - a_1 \delta - a_2 = 0.
126124$$ (eq:2diff6)
127125
128126Applying the quadratic formula to solve for the roots of {eq}`eq:2diff6` we find that
129127
130128$$
131- \delta = \frac{ a_1 \pm \sqrt{a_1^2 + 4 a_2}}{2}
129+ \delta = \frac{ a_1 \pm \sqrt{a_1^2 + 4 a_2}}{2}.
132130$$ (eq:2diff7)
133131
134132For either of the two $\delta$'s that satisfy equation {eq}`eq:2diff7`,
@@ -177,9 +175,9 @@ We'll turn to that after we describe how Ancient Greeks figured out how to compu
177175
178176## Algorithm of the Ancient Greeks
179177
180- Let $\sigma$ be a positive integer greater than $1$
178+ Let $\sigma$ be a positive integer greater than $1$.
181179
182- So $\sigma \in {\mathcal I} \equiv \{2, 3, \ldots \}$
180+ So $\sigma \in {\mathcal I} \equiv \{2, 3, \ldots \}$.
183181
184182We want an algorithm to compute the square root of $\sigma \in {\mathcal I}$.
185183
195193y_ {t} = 2 y_ {t-1} - (1 - \sigma) y_ {t-2}, \quad t \geq 0
196194$$ (eq:second_order)
197195
198- together with a pair of integers that are initial conditions for $y_{-1}, y_{-2}$.
199-
200- First, we'll deploy some techniques for solving the difference equations that are also deployed in {doc}`dynam:samuelson`
201-
196+ together with a pair of integers that are initial conditions for $y_{-1}, y_{-2}$.
202197
198+ First, we'll deploy some techniques for solving the difference equations that are also deployed in {doc}`dynam:samuelson`.
203199
204200The characteristic equation associated with difference equation {eq}`eq:second_order` is
205201
206202$$
207203c(x) \equiv x^2 - 2 x + (1 - \sigma) = 0
208204$$ (eq:cha_eq0)
209205
210-
211-
212206(Notice how this is an instance of equation {eq}`eq:2diff6` above.)
213207
214208Factoring the right side of equation {eq}`eq:cha_eq0`, we obtain
@@ -233,11 +227,11 @@ By applying the quadratic formula to solve for the roots the characteristic equ
233227{eq}`eq:cha_eq0`, we find that
234228
235229$$
236- \lambda_1 = 1 + \sqrt{\sigma}, \quad \lambda_2 = 1 - \sqrt{\sigma}
230+ \lambda_1 = 1 + \sqrt{\sigma}, \quad \lambda_2 = 1 - \sqrt{\sigma}.
237231$$ (eq:secretweapon)
238232
239233Formulas {eq}`eq:secretweapon` indicate that $\lambda_1$ and $\lambda_2$ are each functions
240- of a single variable, namely, $\sqrt{\sigma}$, the object that we along with some Ancient Greeks want to compute.
234+ of a single variable, namely, $\sqrt{\sigma}$, the object that we along with some Ancient Greeks want to compute.
241235
242236Ancient Greeks had an indirect way of exploiting this fact to compute square roots of a positive integer.
243237
@@ -265,13 +259,13 @@ Since $\lambda_1 = 1 + \sqrt{\sigma} > 1 > \lambda_2 = 1 - \sqrt{\sigma} $,
265259it follows that for *almost all* (but not all) initial conditions
266260
267261$$
268- \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) = 1 + \sqrt{\sigma}
262+ \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) = 1 + \sqrt{\sigma}.
269263$$
270264
271265Thus,
272266
273267$$
274- \sqrt{\sigma} = \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) - 1
268+ \sqrt{\sigma} = \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right) - 1.
275269$$
276270
277271However, notice that if $\eta_1 = 0$, then
283277so that
284278
285279$$
286- \sqrt{\sigma} = 1 - \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right)
280+ \sqrt{\sigma} = 1 - \lim_ {t \rightarrow \infty} \left(\frac{y_ {t+1}}{y_t}\right).
287281$$
288282
289283Actually, if $\eta_1 =0$, it follows that
@@ -306,9 +300,9 @@ so again, convergence is immediate, and we have no need to compute a limit.
306300
307301System {eq}`eq:leq_sq` of simultaneous linear equations can be used in various ways.
308302
309- * we can take $y_{-1}, y_{-2}$ as given initial conditions and solve for $\eta_1, \eta_2$
303+ * we can take $y_{-1}, y_{-2}$ as given initial conditions and solve for $\eta_1, \eta_2$;
310304
311- * we can instead take $\eta_1, \eta_2$ as given and solve for initial conditions $y_{-1}, y_{-2}$
305+ * we can instead take $\eta_1, \eta_2$ as given and solve for initial conditions $y_{-1}, y_{-2}$.
312306
313307Notice how we used the second approach above when we set $\eta_1, \eta_2$ either to $(0, 1)$, for example, or $(1, 0)$, for example.
314308
@@ -330,7 +324,6 @@ But first let's write some Python code to iterate on equation {eq}`eq:second_ord
330324
331325We now implement the above algorithm to compute the square root of $\sigma$.
332326
333-
334327In this lecture, we use the following import:
335328
336329```{code-cell} ipython3
594587
595588that
596589
597-
598-
599590$$
600591V^{2,1} V_ {1,1} + V^{2,2} V_ {2,1} = 0
601592$$
602593
603594and
604595
605596$$
606- V^{1,1}V_ {1,2} + V^{1,2} V_ {2,2} = 0
597+ V^{1,1}V_ {1,2} + V^{1,2} V_ {2,2} = 0.
607598$$
608599
609600These equations will be very useful soon.
619610To deactivate $\lambda_1$ we want to set
620611
621612$$
622- x_ {1,0}^* = 0
613+ x_ {1,0}^* = 0.
623614$$
624615
625616
638629This can be achieved by setting
639630
640631$$
641- x_ {2,0} = -(V^{2,2})^{-1} V^{2,1} x_ {1,0} = V_ {2,1} V_ {1,1}^{-1} x_ {1,0}
632+ x_ {2,0} = -(V^{2,2})^{-1} V^{2,1} x_ {1,0} = V_ {2,1} V_ {1,1}^{-1} x_ {1,0}.
642633$$ (eq:deactivate2)
643634
644635Let's verify {eq}`eq:deactivate1` and {eq}`eq:deactivate2` below
@@ -687,30 +678,30 @@ We find that the ratios converge to $\lambda_2$ in the first case and $\lambda_1
687678```{code-cell} ipython3
688679:tags: [hide-input]
689680
690- # Plot the ratios for y_t
691- plt.figure( figsize=(14, 6))
692-
693- plt.subplot(1, 2, 1)
694- plt .plot(np.round(ratios_λ1, 6),
695- label=r'$\frac{y_t}{y_{t-1}}$', linewidth=3)
696- plt .axhline(y=Λ[1], color='red',
697- linestyle='--', label='$\lambda_2$', alpha=0.5)
698- plt.xlabel ('t', size=18)
699- plt.ylabel (r'$\frac{y_t}{y_{t-1}}$', size=18)
700- plt.title (r'$\frac{y_t}{y_{t-1}}$ after Muting $\lambda_1$',
701- size=13)
702- plt .legend()
703-
704- plt.subplot(1, 2, 2)
705- plt .plot(ratios_λ2,
706- label=r'$\frac{y_t}{y_{t-1}}$', linewidth=3)
707- plt .axhline(y=Λ[0], color='green',
708- linestyle='--', label='$\lambda_1$', alpha=0.5)
709- plt.xlabel ('t', size=18)
710- plt.ylabel (r'$\frac{y_t}{y_{t-1}}$', size=18)
711- plt.title (r'$\frac{y_t}{y_{t-1}}$ after Muting $\lambda_2$',
712- size=13)
713- plt .legend()
681+ # Plot the ratios for y_t / y_{t-1}
682+ fig, axs = plt.subplots(1, 2, figsize=(14, 6))
683+
684+ # First subplot
685+ axs[0] .plot(np.round(ratios_λ1, 6),
686+ label=r'$\frac{y_t}{y_{t-1}}$', linewidth=3)
687+ axs[0] .axhline(y=Λ[1], color='red', linestyle='-- ',
688+ label='$\lambda_2$', alpha=0.5)
689+ axs[0].set_xlabel ('t', size=18)
690+ axs[0].set_ylabel (r'$\frac{y_t}{y_{t-1}}$', size=18)
691+ axs[0].set_title (r'$\frac{y_t}{y_{t-1}}$ after Muting $\lambda_1$',
692+ size=13)
693+ axs[0] .legend()
694+
695+ # Second subplot
696+ axs[1] .plot(ratios_λ2, label=r'$\frac{y_t}{y_{t-1}}$' ,
697+ linewidth=3)
698+ axs[1] .axhline(y=Λ[0], color='green', linestyle='-- ',
699+ label='$\lambda_1$', alpha=0.5)
700+ axs[1].set_xlabel ('t', size=18)
701+ axs[1].set_ylabel (r'$\frac{y_t}{y_{t-1}}$', size=18)
702+ axs[1].set_title (r'$\frac{y_t}{y_{t-1}}$ after Muting $\lambda_2$',
703+ size=13)
704+ axs[1] .legend()
714705
715706plt.tight_layout()
716707plt.show()
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