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lectures/matsuyama.md

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@@ -57,11 +57,11 @@ As we will see, coupled oscillators arise endogenously within the model.
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Below we review the model and replicate some of the results on synchronization of innovation across countries.
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## Key Ideas
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## Key ideas
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It is helpful to begin with an overview of the mechanism.
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### Innovation Cycles
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### Innovation cycles
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As discussed above, two countries produce and trade with each other.
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The symbols $N_{j, t}^c$ and $N_{j, t}^m$ will denote the measures of $\Omega^c$ and $\Omega^m$ respectively.
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### New Varieties
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### New varieties
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To introduce a new variety, a firm must hire $f$ units of labor per variety in each country.
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\leq f
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$$
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### Law of Motion
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### Law of motion
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With $\delta$ as the exogenous probability of a variety becoming obsolete,
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the dynamic equation for the measure of firms becomes
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return ab
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```
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### Time Series of Firm Measures
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### Time series of firm measures
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We write a short function below that exploits the preceding code and plots two time series.
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In the second case, different initial conditions are chosen, and the cycles
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become synchronized.
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### Basin of Attraction
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### Basin of attraction
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Next, let's study the initial conditions that lead to synchronized cycles more
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systematically.

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