2.1 General Solution of a pth-order Difference Equation with Distinct Eigenvalues Recall that if the eigenvalues of a(p x p)matrix F are distinct, there exists a nonsingular(p x p) matrix T such that F=TAT-I where T=[x1, x2, .,xp], xi, i= 1, 2, ., p are the eigenvectors of F corresponding to its eigenvalues Ai; and A is a(p x p) matrix such that h100 0A20 00 0 This enables us to characterize the dynamic multiplier (the(1, 1)elements of F2) very easily. In general, we have F=TAT-1×TAT-1×….×TAT TAT-I (15) where A00 02.1 General Solution of a pth-order Difference Equation with Distinct Eigenvalues Recall that if the eigenvalues of a (p × p) matrix F are distinct, there exists a nonsingular (p × p) matrix T such that F = TΛT−1 where T = [x1, x2, ..., xp], xi , i = 1, 2, ..., p are the eigenvectors of F corresponding to its eigenvalues λi ; and Λ is a (p × p) matrix such that Λ =         λ1 0 0 . . . 0 0 λ2 0 . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0 0 . . . λp         . This enables us to characterize the dynamic multiplier (the (1,1) elements of F j ) very easily. In general, we have F j = TΛT −1 × TΛT−1 × ... × TΛT −1 (14) = TΛjT −1 , (15) where Λ j =         λ j 1 0 0 . . . 0 0 λ j 2 0 . . . 0 . . . . . . . . . . . . . . . . . . . . . 0 0 0 . . . λ j p         . 7