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Economic Evolution and Equilibrium

Bridging the Gap

  • Marco Lehmann-Waffenschmidt

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 591)

Table of contents

  1. Front Matter
    Pages I-VIII
  2. General Introduction

  3. Notations and Mathematical Preliminaries

  4. Conceptualization and Definition of Evolutions of Economies in Four General Equilibrium Frameworks

  5. Formal Analysis

  6. Economic Analysis

  7. General Conclusions and Outlook

    1. Front Matter
      Pages 225-225
  8. Back Matter
    Pages 231-274

About this book

Introduction

theory,whichformalizesa dynamiceconomicsystemasa systemofdi?erence, or di?erential, equations. There equilibria mean ‘equilibrium trajectories’ of the whole evolution that, in a certain sense, are optimal. A particularly un- tisfactory feature of this conceptualization of an equilibrium, however, is the factthattheintertemporaloptimizingapproachcompletelypredeterminesthe whole future of the economic system. This “closed loop” approach gives rise to the common reproach that economic theory is predominantly concerned with the question of ‘how the economic system ought to behave’ rather than with the question of ‘how does it behave actually’. This is the point at which the new branch of evolutionary economics has made its entrance. In contrast to growth or business cycle theory, evolutionary economics perceives the evolution of the economic system as essentially “open” to true novelties that are unforeseeable by their very nature. This view clearly makes obsolete any conception of equilibrium that resorts to the idea of a ?nal state of rest, or to the idea of an intertemporally optimizing trajectory which is prespeci?ed ab initio by a system of di?erential equations and initial con- tions. To be sure, there have been attempts to reconceptualize the notion of equilibrium from the evolutionary viewpoint. However, these proposals also appear, in one way or another, to hinge on the ideas of rest. This parti- larly applies to the branch of nonlinear dynamics and deterministic chaotic motion.

Keywords

Bang-bang policy Evolution Open-loop Piecemeal policy economics equilibrium general equilibrium

Authors and affiliations

  • Marco Lehmann-Waffenschmidt
    • 1
  1. 1.Department of Economics Economics, esp. Managerial EconomicsDresden University of TechnologyDresdenGermany

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-540-68664-4
  • Copyright Information Springer-Verlag Berlin Heidelberg 2007
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Business and Economics
  • Print ISBN 978-3-540-68662-0
  • Online ISBN 978-3-540-68664-4
  • Series Print ISSN 0075-8442
  • Buy this book on publisher's site