Abstract: This chapter focuses on classical dynamics. Classical dynamics is usually viewed as the analysis of the economy over time, assuming that the economy is always in equilibrium. The chapter discusses conditions under which the economy tends to the kinds of limiting states postulated in long-run Ricardian analysis. Related to the Malthusian theory is the result that over time in an economy with Koopmans-type consumers, the families with the lowest rate of discount will eventually dominate. Some powerful assumptions must be made to get theorems about dynamics in large countries. However, for small countries, some general points can be made without any special assumption except that international prices have a time path. The chapter shows that over time as capital accumulates, factor prices will pass through regions of factor price nonequalization. The tariffs may arrest the decline in capital returns and encourage growth. Varying reproduction along Malthusian lines leads to the numerical dominance by the most myopic- type and least self-sacrificing type of consumer, who may nonetheless be at a level near serfdom, depending on how severe the myopia is.
Publication Year: 1972
Publication Date: 1972-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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