Static vs. Dynamic Economic Analysis

[jwoodie]

Do you know the difference? In static economic analysis, it is assumed that changes to one part of the economy will not affect other parts of the economy. For example, if tariffs raise the price of some products, people will not change their buying habits to less expensive products. While this may be true for some essential products in a monopolistic situation, it is not true for the vast majority of other products. This is why static economic predictions are almost always off the mark.

In contrast, dynamic economic analysis assumes that people will make rational decisions based on changing circumstances. If the price of one product increases, that will affect their buying decisions. This applies to almost all forms of economic activity. In addition, if products can be sold more cheaply at home, that is where they will start being produced.

A final word on the threat of tariffs. They are a very effective tactic when negotiating trade deals with other nations. It is always better if they come asking you than vice versa.

 

[toobfreak]

Do you know the difference? In static economic analysis, it is assumed that changes to one part of the economy will not affect other parts of the economy. For example, if tariffs raise the price of some products, people will not change their buying habits to less expensive products. While this may be true for some essential products in a monopolistic situation, it is not true for the vast majority of other products. This is why static economic predictions are almost always off the mark.

In contrast, dynamic economic analysis assumes that people will make rational decisions based on changing circumstances. If the price of one product increases, that will affect their buying decisions. This applies to almost all forms of economic activity. In addition, if products can be sold more cheaply at home, that is where they will start being produced.

A final word on the threat of tariffs. They are a very effective tactic when negotiating trade deals with other nations. It is always better if they come asking you than vice versa.

Yes I understand the difference. As far as tariffs are concerned, the lefts Big Lie is that Trump intends to tariff everything costing us $4,000 a year. That is just the latest insane scare tactic of claiming if you elect the GOP they will push your grandmother off a cliff.

Trump intends to use tariffs against TARGET items from TARGETED foreign abusers to normalize trade in a way that will either result in more fair trade for us or by bringing manufacturing markets back home where WE control them. Either way, the consumer pays little more or just buys something else, and America saves billions while boosting our exports CREATING billions.

 

[justoffal]

Do you know the difference? In static economic analysis, it is assumed that changes to one part of the economy will not affect other parts of the economy. For example, if tariffs raise the price of some products, people will not change their buying habits to less expensive products. While this may be true for some essential products in a monopolistic situation, it is not true for the vast majority of other products. This is why static economic predictions are almost always off the mark.

In contrast, dynamic economic analysis assumes that people will make rational decisions based on changing circumstances. If the price of one product increases, that will affect their buying decisions. This applies to almost all forms of economic activity. In addition, if products can be sold more cheaply at home, that is where they will start being produced.

A final word on the threat of tariffs. They are a very effective tactic when negotiating trade deals with other nations. It is always better if they come asking you than vice versa.

Not having tariffs is far more expensive than having them.

There's also day to day economics versus epochal economics.

Day to day economics may tell you that you pay more for a Chinese produced good today than you did yesterday.

What it does not tell you is how much it cost the nation in lost employment over the past 20 years.

There's no easy way out of this. We allowed ourselves to get here by being lazy and looking the other way. Getting out of it is going to require some pain.