# Significance of Economic Dynamics

## Economics Assignment Help Online

**Significance of Economic Dynamics**

Realistic, Economic Dynamics is 1110 realistic and light-giving Ihan economic statics. It gives us a conspectus of the process of change and not just an analysis of the equilibrium·positiOn. Economic static assumes constancy of resources. population, state of technique. investment. tastes. ctc.. but all these ill reality are 1I0t constant. They undergo a continuous and endless change and for a proper understanding of these changes there is no escape from the dynamic tool Dynamics analysis takes closer to reality. llere is no assumption of ceteris paribus. It is a forbidden fruit as it were. In economic dynamics, we lake into account all the changes. lags, sequences, cumulative magnitudes and even expectations. In statics we deal with stationary states which is a fiction. There is activity but the speed is uniform. There is movement but there is no change. Golding compares static equilibrium with a ball rolling at a constant speed or a forest where trees sprout. grow and die. but where the composition of the forest as a whole remains unchanged. But, in dynamics, we consider the real world which is ever changing. It relates to a developing economy. The economic dynamics gives us a movie of the functioning economy and the process Ill’ its development by peering through the functional mechanism which propels the economy out one period out of the preceding one of Stability. The fact, dynamic analysis is concerned with the process of change and the path whereby this change leads to a new equilibrium position. enables us to analyses the way economy traverses its path from a position to a new equilibrium state. By such all analysis the conditions for the stability of equilibrium can be studie. The dynamic analysis has

assumed a place of paramount importance in the field of those problems which iIlH)IH’ time lags, rates . With the help of dynamic analysis more general and fundamental results can be derived in the study of such problems than from static analysis. Recent advances in the field of econometrics make extensive use of dynamic models based (the economic dynamics. Noteworthy works ill thi!. field arc of Klein. Samuelson. Guldberger ami Koyack.problems being woven round the human wants arc not amenable to dynamic analysis because their future structure cannot be derived from the present wants.