Economic equilibrium

So is it a source of controversy…on one hand you have some econ critics who say “Econ models wrongly assume that the imageseconomy is always in equilibrium,” and on the other hand you have economists responding that “No, economics models are defined to always be in equilibrium.”

“Equilibrium” can mean many different things.

There are many different types of equilibria in economics. This may sound intellectually dishonest, but it’s not; the same is true in biology, physics, or any other science. “Equilibrium” just means “balance”, and there are lots of different kind of things that can balance. In fact, any equation you write down that isn’t true by definition can be interpreted as an “equilibrium” relationship, or “equilibrium condition” – the equation is simply a statement that whatever’s on the left-hand side of the equation is balanced with whatever’s on the right-hand side. Continue reading “Economic equilibrium”

Game Theory & The Euro Crisis : Italy in strong position

Well I am not an expert on game theory but one of my friend is taking lectures on it. So it would be interesting to put across as majority of the world feel relaxed about the euro crisis after the last month submitt. But there are indications like the rise in the yield of Spain and the latest by two strategists David Woo and Athanasios Vamvakidis.

Using game theory to consider how the situation might evolve, they believe the crisis will boil down to a game of bluff between Italy and Germany in which neither country has an incentive to back down.

That doesn’t mean this would be the best outcome for either side; in-game theory, Continue reading “Game Theory & The Euro Crisis : Italy in strong position”