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Schlicht, Ekkehart (1997): The Moving Equilibrium Theorem Again. Electronic reprint with corrections. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 1997-51 Economic Modelling, 14
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Abstract

The analysis of multivariate dynamical models can sometimes be considerably simplified by the assumption that one or several variables move infinitely fast to their equilibrium values. The method is known as the 'moving equilibrium method'. Various dynamical theories that build on equilibrated markets presuppose the validity of this method. The Moving Equilibrium Theorem states that such an analytic procedure leads to correct conclusions if the movement of the fast variables is indeed sufficiently fast. The purpose of this paper is to present a simple direct proof of the theorem for the linear case.

Abstract