“Economic dynamics” is a large topic. In the space allotted here it is impossible to fully cover it. So, I shall begin by clarifying what will not be covered in this entry.

While the focus will be more on macroeconomic than microeconomic dynamics, long-run growth will not be a main topic, although it will enter in as it is connected to economic fluctuations.

Also, there will be less focus on models of dynamics that rely mainly upon exogenous shocks as their main driver, sometimes argued to represent classical approaches. It must be recognized that much of current modelling in macroeconomics follows such an approach, with Frisch’s (1933) “rocking horse model” the archetype for much of what followed in this vein (Lucas and Sargent 1981; Kydland and Prescott 1982; Long and Plosser 1983). Business cycles arise from shocks to productivity or to the desire to work on the part of labour. Little effort is made to model these shocks, and the result is that such models have performed poorly in explaining such events as the crisis of 2008 and the events following it. However, it must be recognized that the wisecrack of William “Buz” Brock that the only truly exogenous force in the economy is the sun (personal communi­cation 1985) contains considerable truth.

All this means that we shall mostly be concerned with fluctuations that arise endog­enously from an economy, or with models that exhibit such endogenously driven fluc­tuations, even as there may be stochastic noise ultimately driving the system. Though we shall not be focusing on growth per se, we shall consider fluctuations that may occur over longer periods of time than short-period business cycles, which may indeed involve supply-side processes and effects.

Another issue that will not be focused on is that of microfoundations of macro­economics. This is not an unimportant issue, but models that arise from microfounda­tions or directly from the macro level will not be distinguished. Probably most macro fluctuations either resemble or arise from micro phenomena, with such examples as lags in production leading to cobweb dynamics or speculative bubbles that usually initially appear in particular markets but can spread to affect an entire economy. However, there are sources of macro fluctuations that arise largely directly at the macro level, particu­larly related to monetary and financial markets as well as fiscal policies, even though this entry will not focus on policy issues either. This entry draws heavily on several other works, especially Haberler (1963), Freeman (1996), Rosser (1999, 2000, 2004), Gandolfo (2009), and Venkatachalam and Velupillai (2012).