Complex eigenvalues

Dynare help (legacy posts)
1

Hello everybody!

I would like to know what are the implications of having complex eigenvalues. Is this a bad thing? Does it affect the results of the simulation?

Thank you,
Alexandra

2

No it is not necessarily a bad thing. In a linear dynamical system, complex eigenvalues smaller than one in modulus generate damped oscillatory trajectories.

Please, consult a textbook for in depth discussion.

Best

Michel

3

Thank you very much for your answer. Actually, the complex eigenvalues that I am getting are larger than one in modulus. I will look into this.

Best regards,
Alexandra

4

Note that the solution of linear rational expectation model involves canceling the effect of eigenvalues larger than one in modulus. Look at the paper by Blanchard and Kahn (1980).

Best

Michel