Abstract
Abstract In all cases the notion of stability will play a fundamental role. A stable system may be defined as one in which the unique equilibrium (also called stationary state) is eventually restored following a shock to one or more of the exogenous variables. Obviously, to operationalize this definition we must in each case indicate exactly what we mean by an equilibrium, and which variables we classify as exogenous. When the system has multiple equilibria (or stationary points), there may be stable and unstable equilibria. If there is a unique stable equilibrium, we shall choose that equilibrium as the relevant one and can still speak of a stable system.
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