Abstract
In a pair of wartime papers, Paul Samuelson (1941, 1942) asserted the mutually supportive relationship of economic dynamics (the study of economies out of equilibrium) and comparative statics (the comparative study of in equilibrium). By formally modelling the dynamic processes by which economies respond to disequilibrium and then imposing the requirement that the processes be stable (converge to an equilibrium), one can derive fruitful theorems in comparative statics, that is, theorems concerning the effect of parametric changes (in tastes, techniques of production or taxes, for example) on equilibrium values of the variables; and, looking in the other direction, assumed properties of an equilibrium can yield information about the stability–instability properties of a parent disequilibrium system. That this mutually supportive or dualistic relationship exists was dubbed by Samuelson the correspondence principle. Initially, the principle was formulated in terms of local stability and local comparative statics, and it is still best known in that form. Later, however, Samuelson provided a one-variable global version of the principle; see Samuelson (1971, 1975).
The original version of this chapter was revised: The copyright year was corrected.
This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman
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Bibliography
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Kemp, M.C. (1987). Correspondence Principle. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_3036-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_3036-1
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Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
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Chapter history
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Latest
Correspondence Principle- Published:
- 17 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_3036-2
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Original
Correspondence Principle- Published:
- 28 December 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_3036-1