Business Cycles: A Theoretical, Historical, and Statistic by Joseph A. Schumpeter (Author) , Rendigs Fels (ed.)

By Joseph A. Schumpeter (Author) , Rendigs Fels (ed.)

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Hence, in these cases, stationary flow and equilibrium are analytically equivalent and, describing the same mass of facts, have the same empirical basis, the statistical part of which consists primarily in the well-known findings about the great Stability in time of the pattern of consumption. Joseph Schumpeter, Business Cycles. (1939) 35 equilibrium are self-explanatory. Equilibrium that is unique and stable is, of course, the only perfectly satisfactory case. So far we have been using the concept of general or Walrasian equilibrium.

In view of the role these terms play in modern discussions of economic policy and in arguments about business cycles, it is necessary to point out that they are nontechnical and cover many different patterns. And to the difficulty of defining— wo might facilitate the task by considering Rigidity as the limiting case of Stickiness— corresponds the difficulty of measuring them. There are, of course, numbers of reasons why some prices should move more slowly or less strongly than others or all of them more slowly or less strongly than other elements of the system, and nothing can be inferred from the statistical fact alone.

Theorems which do this we call dynamic. Joseph Schumpeter, Business Cycles. (1939) 41 The simplest case in point arises from technological lags which would in themselves suffice to account for the fact that in practice we never observe any but those provisional or short-time equilibria mentioned above. There are always elements in the setup of a firm, as well as in the economic system, which for technological reasons cannot be adapted quickly, while others can. Now the importance of this for our present discussion does not lie in the obvious fact that full or perfect equilibrium, since it takes so much time to come about, may fail to come about at all and that, therefore, new disturbances always impinge on an imperfectly equilibriated system.

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