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- Title
TIME SERIES AND THE DERIVATION OF DEMAND AND SUPPLY CURVES.
- Authors
Gilboy, Elizabeth Waterman
- Abstract
The article presents the derivation of demand and supply curves from time series analysis. The study of the economic history of the commodity under consideration is of paramount importance, and the use of statistical method and the interpretation of statistical results must be dependent on the economic considerations arising from such a study. In other words, a high negative correlation yielding a negatively inclined curve, which is an excellent fit to the scatter, may mean nothing economically, if the study of the commodity during the period yields no basis and the supply schedule had shifted and the demand curve remained relatively stable in that period. Strongly defined trends in the series of price-quantities may cause a relation between the series, which has little or nothing to do with the fundamental relation between prices and quantities. If a demand curve can validly be derived, it must be assumed that the supply curve has shifted, while the demand curve has not. The elimination of trend is judged necessary because the demand curve has not remained constant. The use of statistical methods must be based upon justifiable economic assumptions and verified historical fact.
- Subjects
DEMAND function; TIME series analysis; COMMERCIAL products; SUPPLY &; demand; ECONOMIC equilibrium; SUPPLY-side economics
- Publication
Quarterly Journal of Economics, 1934, Vol 48, Issue 4, p667
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1883546