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).
Famous quotes containing the word comparative:
“The hill farmer ... always seems to make out somehow with his corn patch, his few vegetables, his rifle, and fishing rod. This self-contained economy creates in the hillman a comparative disinterest in the worlds affairs, along with a disdain of lowland ways. I dont go to question the good Lord in his wisdom, runs the phrasing attributed to a typical mountaineer, but I jest caint see why He put valleys in between the hills.”
—Administration in the State of Arka, U.S. public relief program (1935-1943)