ABSTRACT
In the study of many problems, the change in a variable is most naturally modeled in discrete units of time. For many bank loans, interest is computed on a monthly basis so that the level of debt is updated on a monthly basis. Government data are routinely released on a quarterly or annual basis, firms report profit each quarter. Thus, unemployment data or profit data are seen as sequences ut, u t−1,… or πt,π t−1,…. When the data evolve according to a systematic pattern, difference equations may be used to study long-run behavior.
