Difference between Static and Dynamic Analysis

 1. Time Element

In static economic analysis, the time element has nothing to do with economic variables. The static economy is also called a timeless economy.

On the contrary, In dynamic economics time element occupies an important role. All economic variables refer to the different points of time.

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2. Process of Change

The static analysis does not show the path of change but the dynamic economic analysis also shows the path of change. 

Static economics is called a still picture where dynamic economics is called a movie of the market.

3. Equilibrium

Static economics studies only a particular point of equilibrium but dynamic economics also studies the process by which equilibrium is achieved.

Therefore the static analysis is a study of equilibrium only whereas dynamic analysis studies both equilibrium and disequilibrium.

4. Study of reality

Static analysis is far from reality while dynamic analysis is nearer to reality.

Static analysis is based on unrealistic assumptions of perfect competition, perfect knowledge, etc. On the other hand, the dynamic analysis takes these economic variables as changeable.

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