The traverse, equilibrium analysis and post-Keynesian economics
The Traverse refers to the movement of the economy outside equilibrium. It requires a consideration of how an economy may achieve equilibrium, and how it may navigate towards a new one if conditions change. Analysis of these themes, from the classical economists onwards, leads to the conclusion that it is difficult to envisage any useful role for equilibrium theory in the absence of some evidence that there are forces in the economy which propel it to equilibrium, without influencing the position to which the economy is gravitating towards. Complicating factors, emphasised in the post-Keynesian literature, include the existence of path-dependency, hysteresis, cumulative causation and the evolutionary nature of economic change.
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- Franco Modigliani, 1959. "New Developments on the Oligopoly Front: Reply," Journal of Political Economy, University of Chicago Press, vol. 67, pages 418.
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