From steady-state to dynamic equilibrium : the perspective in the interwar period

The period between the two world wars was characterized by theoretical pluralism and the proliferation of research programs in economic dynamics. In this article, we consider the mathematical approach to building dynamic economics developed in the United States in the twenties and in Italy in the following decade by mathematicians and economists with substantial mathematical and statistical backgrounds. Despite important differences, the versions developed in the United States and Italy can be treated jointly because they shared the same view of dynamics as an equilibrium phenomenon. In the United States, in a context still largely dominated by institutionalism, the dynamic equilibrium approach was carried forward by two mathematicians, G. Evans and C. Roos. In Italy, this strand of analysis became the principal area of inquiry for the Paretian school, which during the 1930s made major contributions through L. Amoroso and G. La Volpe. In attempting to dynamize the general equilibrium, these authors made important contributions mainly in mathematical terms, introducing functional calculus in economics dynamics, a tool that in the postwar period proved essential for research in this field of inquiry.