Development and Underdevelopment in the History of Economic Thought

The rocking horse model: riding towards equilibrium?

Guillot Leon, University Paris 1
Dupont-Kieffer Ariane, University Paris 1

It was in 1918 that Wicksell developed the metaphor of the rocking horse to show the underlying mechanisms of economic fluctuations. This reasoning was taken up and popularized by Frisch in the form of an impulse and propaganda reasoning that explains the mechanisms leading to economic equilibrium. The objective of this article is to show the path that allowed Frisch to systematize Wicksell's approach in his desire to found econometrics as a field in its own right and around the justification of the equilibrium as the reference point of the economic system. The two authors agree to show that "the source of energy which maintains the economic cycles are erratic shocks". However, the systematization operated by Frisch partly involves a selection among the causes advanced by Wicksell in order to complete and focus on Wicksell’s aim of modelling the economic phenomena. While for Wicksell the non-return to equilibrium comes from social relations and technical progress, Frisch proposes an analysis where this non-return comes exclusively from net investment (technical innovations) and from waves of re-investment (related to the time structure of capital goods). These two approaches ended in two conceptions of equilibrium and stability of the economic system.


Keywords: Frisch; Wicksell; equilibrium