Types of Economic Analysis
Types of Economic Analysis There are three types of economic analysis. They are 1. Static Analysis 2. Comparative Static Analysis 3. Dynamic Analysis 1. Static Analysis Static analysis studies a particular point of equilibrium. It does not show the path of change. It only tells us about the condition of equilibrium. In static economic analysis, time element has nothing to do. All economic variables are constant and refer to the same point of time. It is also known as Equilibrium Analysis. Example of Static Analysis is the simple market model with one equilibrium point. Useful mathematical tools for static analysis: Linear Models Matrix Algebra 2. Comparative Static Analysis Comparative static analysis is the comparison of two different economic outcomes, before and after a change in some underlying parameter. It does not study the motion towards equilibrium nor the process of change itself. Comparative Statics completely disregard the process of adjustment of the variables and...
