The Italian contribution to early economic dynamics

Abstract

Contrary to the prevailing literature, the study of economic dynamics began at the end of the nineteenth century, at least four decades before Hayek's and Samuelson's essays on dynamic equilibrium, as Pareto's dynamic insights prove. Throughout this early phase of the discipline, economists interested in dynamic studies put forward a wide spectrum of suggestions. This paper investigates the lines of research that sprang from the Italian debate either according to or in opposition to the Paretian mechanistic legacy, aiming to show that a growing awareness of subjective variables' role weakened the mechanistic faith of the strictly Paretian followers, pushing them toward probabilistic analysis, anchoring dynamics to uncertainty and disequilibrium.Dynamic economic equilibrium, Pareto and Italian economists, mental variables, disequilibrium,

Cobweb Theory, Market Stability, and Price Expectations

“…These diagrams from the first wave contributions are the basis for presentations in Kaldor (1934), Ezekiel (1938), Norman Buchanan (1939), and other sources. Close examination of the graphical structure of the cobweb diagrams situates first wave cobweb theory within “a wide spectrum of research and concepts that coalesced only in the 1930s, when the topics of ‘stability’ on the one hand, and ‘expectations’ on the other, polarized economic dynamics studies” (Tusset 2009, p. 267). Numerous insights and debates concerning the broader interpretation of statics, dynamics, and stationary state can be roughly divided into the “objective,” largely mathematical approaches based on analogies with mechanics, and the “subjective,” incorporating expectations and other psychological factors.…”