THE卫 CONOMIC JOURNAT MARCE wide repercussions disturbing the whole system. It is even held that the whole question of the stability of the static equilibrium, in the sense of the tendency of a relapse to it when a random departure occurs, is itself a dynamic problem, which cannot be looked after by the system of static equations. I have the impression that this type of criticism exaggerates the importance of this problem, and constitutes to some extent a failure to see the wood for the trees, and that on its own ground the theory of static equlibrium is well able to hold its own But when we look at the dynamic equilibrium, new vistas are pened. The line of output traced by the warranted rate of growth is a moving equilibrium, in the sense that it represents the one level of output at which producers will feel in the upshot that they have done the right thing, and which will induce them to continue in the same line of advance. tock in hand and equip ent available will be exactly at the level which they would wish to have them. Of course what applies to the system in general may not apply to each individual separately. But if one feels he has over-produced or over-ordered, this will be counterbalanced by an opposite experience of an equal importance in some other rt of the field But now suppose that there is a departure from the warranted rate of growth. Suppose an excessive output, so that G exceeds Go. The consequence will be that Cp, the actual increase of capital goods per unit increment of output, falls below C, that du stock or shortage of equipment, and the system will be stimulated o further expansion. G, instead of returning to Go, will move farther from it in an upward direction, and the farther it diverges the greater the stimulus to expansion will be. Similarly, if G falls below Ga, there will be a redundance of capital goods, and e exerted this will cause a further vergence and a still stronger depressing influence; and so on Thus in the dynamic field we have a condition opposite to that which holds in the static field. A departure from equilibrium nstead of being self-righting, will be self-aggravating. Go repre- sents a moving equilibrium, but a highly unstable one. Ofinterest this for trade-cycle analysis Suppose an increase in the propensity to save, which means that the values of 8 are increased for all levels of income. This necessarily involves, ceteris paribus, a higher rate of warranted growth. But if the actual growth was previously equal to the warranted growth, the immediate effect is to raise the warranted