he augmented system.
17 I have applied this method to the problem of disentangling lags in expectational and cash balance adjustments .
18 More directly the matrix equationif k = B-1.
The usefulness of this result lies not so much in providing a policy maker with the rules of adjustment, since there is no problem if the basic matrix is known, and the rule gives insufficient information if the basic matrix is not known. The point is rather that pieces of information about the inverse may be sufficient to distract policy makers from mistakes, and that conditions like the Hicks conditions may be a sufficient guide to the relative importance to be attached to particular instruments.
19 I have discussed the implications of this condition in some detail .
20 Even the gap between the true dynamic stability and Hicksian stability may be bridged by integrating Hicksian stability conditions with the "Samuelson-Le Châtelier principle" (see, for example, Samuelson ) which can be expressed entirely in terms of the Hicksian determinants. Hicksian stability and dynamic stability mesh together under appropriate conditions of gross substitutes, gross complements, and symmetry, a common link being sign symmetry; and sign symmetry of the inverse of the basic Hicksian matrix is sufficient for at least one of the Le Châtelier conditions to hold (DeltaDeltaii,jj - DeltaiiDeltajj < 0 if Deltaij and Deltaji, have the same sign).
21 A further implication of the Hicks conditions was called to my attention by Daniel McFadden, who had proved, in a paper presented at the 1963 Econometrica Society meetings in Boston, Massachusetts, that if the Hicks conditions of perfect stability are satisfied, a stable dynamic system of the form can always be found for a diagonal K matrix with positive diagonal coefficients; the result also holds in the global form. Prior to McFadden's result, and unknown to him, a local version of the theorem had been published; see Fisher and Fuller .
In the context of the currency problem discussed above, the theorem mea