[OPE-L:3059] Re: On Alan Freeman's Essay on Okishio

Allin Cottrell (cottrell@wfu.edu)
Thu, 19 Sep 1996 13:21:20 -0700 (PDT)

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On Thu, 19 Sep 1996, Duncan K. Foley wrote:

> 2. It's not at all clear to me what investment "the people who pay the
> economists" have in stationary solutions to dynamical systems. I don't see
> why stationary solutions "express in pure form the notion that a free
> competitive market automatically and without external interference arranges
> for a set of prices and quantities at which all goods are sold." Any market
> clearing path of prices, stationary or not, has this property.

I agree with Duncan here. Note that the proponents of "new classical"
rational expectations macromodels -- which seem clearly enough to
serve an apologetic function -- typically work in terms of dynamical
paths, for instance the path of the system towards (long-run)
purchasing-power parity, or towards a steady-state capital stock.
Particularly in the latter case, it would obviously make no
sense to suppose that the system immediately jumped to its
stationary state following a change is some relevant parameter.
This is all very standard.

Allin Cottrell.