Comparative statics

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Comparative statics is the comparison of two different equilibrium states, before and after a change in one of the variables. As a study of statics it compares two different unchanging points, once they have changed. It does not study the motion towards equilibrium, nor the process of the change itself.

It is one of the primary analytical methods used in economics, where it is very commonly used in the study of changes in supply and demand when analyzing a market and changes in monetary and fiscal policy when analyzing the economy. The term 'comparative statics' itself is more commonly used in relation to microeconomics (including general equilibrium analysis) than to macroeconomics. Comparative statics was formalized by John R. Hicks (1939) and, most clearly, Paul A. Samuelson (1947) (Kehoe, 1987, p. 517).

For models of stable equilibrium rates of change, such as the neoclassical growth model, 'comparative dynamics' is the counterpart of comparative statics (Eatwell, 1987).

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[edit] References

John Eatwell et al., ed. (1987). "comparative dynamics," The New Palgrave: A Dictionary of Economics, v. 1, p. 517.
John R. Hicks (1939). Value and Capital.
Timothy J. Kehoe, 1987. "comparative statics," The New Palgrave: A Dictionary of Economics, v. 1, pp. 517-20.
Paul A. Samuelson (1947). Foundations of Economic Analysis.