Equilibrium and disequilibrium

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Chapter 3 in The International Monetary System and the Theory of Monetary Systems, 2016, pp 16-25 from Edward Elgar Publishing

Abstract: The terms ‘equilibrium’ and ‘disequilibrium’ are quite often used in economics (for instance, when speaking of a balance of payments equilibrium or disequilibrium), but they need to be clarified. In fact, there are frequent ambiguities or errors in relation to these concepts. In various scientific fields, such as physics, ‘equilibrium’ normally refers to situations in which variables are not changing (stable equilibrium). An economic equilibrium cannot be defined in this way since it concerns the thoughts, decisions and actions of individuals who react to one another. This chapter explains why the term ‘equilibrium’ in economics should be defined as a situation in which individuals are satisfied.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2016
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