The Degree of Damping in Business Cycles

IN RECENT YEARS a number of theoretical and statistical investigations' in the field of business-cycle analysis have made use of differeince equations, or mixed difference and differential equations. These equations serve to study the possible endogenous movements of a schematized economic system governed by a set of as many structural relations as there are variables, the movements of which are considered. In the investigations referred to, the treatment of such a set of equations has been to eliminate successively all variables but one, which leaves one from which the possible movements of the system under consideration are studied. If the final equation in the variable Zt is a linear homogeneous difference equation or mixed difference and differential equation, possible movements of Zt are found by substituting for it in the final equation an expression of the form2