Meaning:

The term Dynamic means changing or moving. So, dynamic economics is a study of the changing economy. In other words it is a study of changes in the economic system. The word dynamic means causing to move in economic dynamics the relation between the relevant variable refer to different point of time. Its takes in to consideration all the changes in the economy, such as the population, production, income of individuals Etc. It gives importance to time element which shows the relationship between different economic variables at point of time. The uses and limitations of economic dynamic is the important aspect to study.

 According to professor Hicks “economic theory in which all quantities must be dated.

Uses of economic dynamics:

• It is realistic: it lies in reality not in fiction, it causes and effect of changing economic phenomenon enables us to see a moving picture of the viewing of an economy.
• The study of stability of equilibrium: it is a study of not only equilibrium position but of changing equilibrium. It studies the behavior of the economy and economic system in disequilibrium and traces the path of the forces that brings a new equilibrium position.
• In the study of the problem of classical economics: the problem in classical economics also sends themselves to dynamic analysis. The Ricardian theory of distribution and the Malthusian theory of population are exercise of the dynamic theory.
• Problem of economic growth: problem involving time lags, rates of growth and sequence analysis required the case of dynamic relationship. The importance of dynamic analysis is lies in studying the process of economic development whether in a short term or long run.
• In a business cycle: the study of economic dynamic presents a realistic analysis of a secular growth speculation and cyclical fluctuation. Because they all involve the elements of time. it has proved more useful the field of business cycle.
• Lastly in Keynes theory: general theory is regard as a special case of moment general dynamic system which is concern with the determination of total national income through time. The inducements to save and invest are two determinants of national income which is depend on economic dynamic.

Limitations of economic dynamics:

• Complex method: It is highly delicate and complex method which needs cautions. It has led to much controversial among economist in interpreting economic variable used by economic theoreticians.
• Lack of favorable condition: In economic dynamic there is a lack of favorable condition.
• Complex Phenomena: It is very complex and only a few economists occupied with the technique of advanced mathematics. Dynamic models are often mathematically complex and require sophisticated techniques to analyze and solve. This complexity can make them less accessible and harder to understand.
• Data Requirements: Accurate dynamic analysis typically requires extensive data over time, which may not always be available or reliable. This can limit the accuracy and applicability of dynamic models.
• Sensitive Assumption: Dynamic study are highly sensitive to the assumptions made about the behavior of economic agents, technological changes, policy impacts, and other factors. Incorrect assumptions can lead to misleading results.
• Uncertainty and Predictability: Economic dynamics involve many variables and interactions, making it difficult to predict outcomes with certainty. Small changes in initial conditions can lead to significantly different outcomes, reducing the reliability of predictions.
• Long-Term Phenomena: Economic dynamic often study long-term trends and outcomes, which may overlook short-term issues and immediate policy concerns that are also important.

Conclusion:

 The static and dynamic approaches are not competitive but complementary of each other it is useful to study some economic problems. Through the static analysis while other may be studies through the dynamic approach.

also read: explain the uses and limitations of economic statics.