Monday, April 01, 2013

The ultimate goal of economic analysis

According to Hayek:

"Dynamics," he explains, "refers to an explanation of the economic processes as it proceeds in time, an explanation in terms of causation that must necessarily be treated as a chain of historical sequences." What we then discover "is not mutual interdependence between all phenomena but a unilateral dependence of the succeeding event on the preceeding one. This kind of causal explanation of the process in time is of course the ultimate goal of all economic analysis, and equilibrium analysis is significant only insofar as it is preparatory to this main task." (Quoted in Goodspeed, p. 132)



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