Suppose that in any given period an unemployed person will find a job with probability 0.7 and will therefore remain unemployed with a probability of 0.3. Additionally, persons who find themselves employed in any given period may lose their job with a probability of 0.1 (and will have a 0.9 probability of remaining employed). Write out the Markov system of difference equations for this economy. Compute the stationary distributions.

Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter3: Matrices
Section3.7: Applications
Problem 9EQ
icon
Related questions
Question
Suppose that in any given period an unemployed person will find a job with probability 0.7 and
will therefore remain unemployed with a probability of 0.3. Additionally, persons who find
themselves employed in any given period may lose their job with a probability of 0.1 (and will
have a 0.9 probability of remaining employed). Write out the Markov system of difference
equations for this economy. Compute the stationary distributions.
Transcribed Image Text:Suppose that in any given period an unemployed person will find a job with probability 0.7 and will therefore remain unemployed with a probability of 0.3. Additionally, persons who find themselves employed in any given period may lose their job with a probability of 0.1 (and will have a 0.9 probability of remaining employed). Write out the Markov system of difference equations for this economy. Compute the stationary distributions.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
Algebra
ISBN:
9781285463247
Author:
David Poole
Publisher:
Cengage Learning
Elementary Linear Algebra (MindTap Course List)
Elementary Linear Algebra (MindTap Course List)
Algebra
ISBN:
9781305658004
Author:
Ron Larson
Publisher:
Cengage Learning