What this book is about

This is not a book on mathematics, nor is it a book on economics. It is true that the over-riding emphasis is on the economics, but the economics under review is specified very much in mathematical form. Our main concern is with dynamics and, most especially with phase diagrams, which have entered the economics literature in a major way since 1990. By their very nature, phase diagrams are a feature of dynamic systems.

But why have phase diagrams so dominated modern economics? Quite clearly it is because more emphasis is now placed on dynamics than in the past. Comparative statics dominated economics for a long time, and much of the teaching is still concerned with comparative statics. But the breakdown of many economies, especially under the pressure of high inflation, and the major influence of inflationary expectations, has directed attention to dynamics. By its very nature, dynamics involves time derivatives, dx/dt, where x is a continuous function of time, or difference equations, xt - xt-1 where time is considered in discrete units. This does not imply that these have not been considered or developed in the past. What has been the case is that they have been given only cursory treatment. The most distinguishing feature today is that dynamics is now taking a more central position.