Econometrica Vol. 10 No. 3/4 1942
A "Simple" Theory of Business Fluctuations
Abstract
THE FOLLOWING THEORY of business fluctuations is claimed to be simple in the mathematical sense as stated by Jeffreys2 and also to represent the simplest possible dynamic extension of the Walrasian system. It explains the business cycle as a purely speculative short-run equilibrium phenomenon. Assume an economic system consisting of n commodities. The buyers and sellers take into account not the actual but the anticipated price. Assume further with Evans that they form their anticipations upon the prevailing price and the price tendency, i.e., the rate of change of the price in time.' If all relationships are linear (as first approximations), we get, for the demand for the ith commodity,
- DOI
- 10.2307/1905472
- Volume
- 10
- Issue
- 3/4
- Pages
- 317
- Sources
- openalex crossref