Abstract
Dynamics is concerned with the behavior through time of all endogenous variables given arbitrary initial conditions. In terms of markets, it concerns itself with an explicit statement of how prices change over time, that is, with price-adjustment processes. This chapter discusses dynamic stability and the variety of price-adjustment processes. The chapter discusses differential equations that have played an important role in many branches of science and economics. In the early development of this branch of mathematics, explicit integration techniques were evolved for handling standard types of differential equations. However, the simple rules of integration failed and in practice, numerical methods were used. The chapter discusses static stability of which three are paramount: (1) Marshallian, (2) Walrasian, and (3) Hicksian.
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