The arguments for equilibrium in economic theory

Debates over equilibrium in economic theory have been going on since Leon Walras started his studies aiming at proving the exsistance, uniqueness and stability of general equilibrium. In proving the existance of general equilibrium, classical and neoclassical economists ommited time dimension in their works that weakens the consistency of their models in real life. Keynes also suffered this problem since he adopted static eqiulibrium models in his anlayses. Most economists used static equilibrium models to support their views although they know that dynamic equilibrium models are more realistic than their static models. Nevertheless Von Neumann dynamic general equilibrium model that depends on more realistic assumptions can not explain the path that brings the economic system to equilibrium since it keeps future expectations out of the model. The growing criticism to the static general equilibrium models that fail to predict economic crises has increased the credit of dynamic general equilibrium models. There is no model in economic theory upon which a general agreement has focused so far. The hard core of debates over equilibrium in economic theorizing is the fact that static general equilibrium models are convenient for economic forecasting but they do not depend upon realistic assumptions while dynamic general equilibrium models are not convenient for economic forecasting, but they based on realistic assumptions. Consequently it seems that debate over equilibrium will stay on the agenda of economists for ages.Key Words: Equilibrium, Static Equilibrium, Comparative Static Equilibrium, Dynamic General Equilibrium, DSGE