 Solution

Let $f(X,Y)=X[r/(1+b{Y}^2)-\delta ]$. At the positive steady state, $1+b(N^{\ast }{)}^2=r/s$, where $s=\delta +1$. The two partial derivatives areThe first-order Taylor expansion with $N_t=N^{\ast }+n_t$ therefore givesEquivalently, the linearization on $(n_t,n_{t-1})$ has matrix $\left(\begin{array}{cc}1& -a\\ 1& 0\end{array}\right)$ and characteristic polynomial ${\mu }^2-\mu +a$.