Dynamic Economic Analysis by Gerhard Sorger download in ePub, pdf, iPad
It is worth mentioning that it is quite possible that whereas a variable may be changing from the micro point of view, but stationary from the macro point of view. Many economic variables take time to make adjustment to the changes in other variables. This process of falling price continues till demand becomes equal to the supply of the commodity. The task of economic theory is to explain the functional relationships between systems of economic variables. The private debt bubble this caused is unprecedented, probably in human history and certainly in the last century.
But in dynamic economics we also study the path of change or the movement towards equilibrium. This feature of self-generating development over time is the crux of every dynamic process. Hicks have greatly dynamised the macroeconomic theory of Keynes. Growth, not oscillation, is the primary subject- matter for study in economic dynamics.
It only tells about the conditions of equilibrium. Therefore, static analysis is a study of equilibrium only whereas dynamic analysis studies both equilibrium and disequilibrium. Dynamic analysis allow us to see the path of variable how the variable change with time. Thus, in economics the quantity demanded of a good at a time is generally thought to be related to the price of the good at the same time. It is in the study of growth that dynamic analysis becomes more necessary.
Theories of trade cycles have been advocated only through the introduction of dynamic economics. This law states that, other things remaining the same, the quantity demanded varies inversely with price at a given point or period of time.
While the former involves period analysis, the latter rates of change analysis. In a real world, economic variables like national income, consumption, etc. According to him, economic dynamics as a technique has to consider rates of change of certain variables and how they are related to the rate of change of some other variables.
In static economic analysis time element has nothing to do. Theories of trade cycles are based on dynamic economics as they refer to the fluctuations of the different time periods. In other words, the development of a dynamic process is self- generating. This path can be explained with the help of the diagram given below which relates to price determination in a market. The relations between certain variables, the values of which refer to the different points or different periods of time are known as dynamic relationships.
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