In economics, comparative statics is the comparison of two different economic outcomes, before and after a change in some underlying exogenous parameter.
As a study of statics it compares two different equilibrium states, after the process of adjustment (if any). It does not study the motion towards equilibrium, nor the process of the change itself.
Comparative statics is commonly used to study changes in supply and demand when analyzing a single market, and to study changes in monetary or fiscal policy when analyzing the whole economy. The term 'comparative statics' itself is more commonly used in relation to microeconomics (including general equilibrium analysis) than to macroeconomics. Comparative statics was formalized by John R. Hicks (1939) and Paul A. Samuelson (1947) (Kehoe, 1987, p. 517) but was presented graphically from at least the 1870s.
For models of stable equilibrium rates of change, such as the neoclassical growth model, comparative dynamics is the counterpart of comparative statics (Eatwell, 1987).
Read more about Comparative Statics: Linear Approximation, Comparative Statics Without Constraints, Comparative Statics With Constraints, Limitations and Extensions
Famous quotes containing the word comparative:
“That hour in the life of a man when first the help of humanity fails him, and he learns that in his obscurity and indigence humanity holds him a dog and no man: that hour is a hard one, but not the hardest. There is still another hour which follows, when he learns that in his infinite comparative minuteness and abjectness, the gods do likewise despise him, and own him not of their clan.”
—Herman Melville (1819–1891)