On the Transition from Long-period to Short-period Equilibria

Abstract

The paper examines the contributions of Myrdal, Lindahl, Hicks and Hayek that initiated the transition from the traditional long-period method to the methods of 'intertemporal' and 'temporary equilibria' in neoclassical general equilibrium analyses. It is shown that in the early contributions the idea of a tendency towards a long-period position was not completely abandoned, and that the new 'dynamic' equilibrium concepts were conceived by some of their originators as useful analytical devices for studying transitions between long-period equilibria only.

Sraffa and the Reconstruction of Economic Theory: Volume One

“…Reasons of space forbid treatment of this aspect of the problem in the present work, notwithstanding the light it would shed even on the more strictly analytical points that arise in connection with the abandonment of the traditional method, as well as on the subsequent abandonment of the new method by the same theorists who were the first to favour its adoption. I hope to be able to return to this aspect of the question in a larger work, which, taking stock of the results achieved by several authors since first drew attention to the methodological shift in the dominant theory (see, in particular, Milgate, 1982;Petri, 1991;Gehrke, 2003), I am preparing on the origin and the nature of the new method and the main lines of which, together with the part provided here, were presented at the Conference for the fiftieth anniversary of the publication of Production of Commodities. 2.…”

On the Second Stage of the Cambridge Capital Controversy

“…16. For the origin of the new notions of equilibrium, see also Milgate (1979) and Gehrke (2003). 17.…”

Blaug Versus Garegnani on the ‘Formalist Revolution’ and the Evolution of Neoclassical Capital Theory

“…Interestingly, Walras did not mention those two passages when, in the preface, he listed the changes of that edition, as if he had wanted them to remain unnoticed. 455-460;Christian Gehrke 2003 ;Paolo Trabucchi 2011). generality of economists only some years later, with Hayek's controversy with Frank H. Knight and above all with Hicks's Value and Capital .…”

“…125–142; Heinz D. Kurz and Neri Salvadori 1995, pp. 455–460; Christian Gehrke 2003; Paolo Trabucchi 2011). No doubt, one cause of the shift was Wicksell, who, after abandoning Böhm-Bawerk’s ‘average period of production’ and the connected conception of the amount of capital as a ‘subsistence fund,’ grew uneasy with the need for an endowment of 'capital' measured as an amount of value; indeed, in the Lectures, he wrote: “But it would clearly be meaningless—if not altogether inconceivable—to maintain that the amount of capital is already fixed before equilibrium between production and consumption has been achieved.…”