The Local Stability and Global Stability
Local stability: concerns what happens in the close neighbourhood of the equilibrium.
If points near an equilibrium tend to move towards the equilibrium over time, the equilibrium is said to be locally stable.
If points near an equilibrium tend to move away from the equilibrium over time, the equilibrium is said to be locally unstable.
Global stability: is concerned with what happens in the whole state-space.
What is the global stability of the equilibrium point?
Global stability means that the system will come to the equilibrium point from any possible starting point (i.e., there is no "nearby" condition)
Why is global economic stability important? Promoting economic stability is partly a matter of avoiding economic and financial crises, large swings in economic activity, high inflation, and excessive volatility in exchange rates and financial markets
