Jim: > In partial-equilibrium economic theory, it's neither. S&D are supposed > to be independent of each other, so that they determine price and > quantity together. If we stay at the level of theory, it's possible > that S&D determine each other, but then you've gotten into general > equilibrium theory and/or you've exited standard neoclassical theory.
My understanding of partial-equilibrium theories is a bit different: in a partial equilibrium theory, you either take the prices or quantities as given, depending on whether you are on the demand or on the supply side. But, what I am saying is even beyond that. My question was this: > Just before the collapse of the dot.com bubble, many > equity analysts promoted many stocks that they thought "shit" in the > private and many "individual investors" followed their recommendations > although some of them might thought "shit" in the private, as well. > > What is the direction of causality: were the analysts responding to > the demands of the investors or were the investors reponding to the > supply of the analysts? Don't worry about the words "supply" and "demand" in the above. Put differently, who was responding to whom and how are we going to find an answer to this question by econometric means? Best, Sabri _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
