The Paretian tradition of dynamic general equilibrium in Italy's interwar period

The period between the two world wars was characterized by marked theoretical pluralism and the proliferation of research programmes in the field of economic dynamics. In this article we consider the mathematical approach to building dynamic economics developed in the United States in the twenties and in Italy in the following decade by mathematicians and economists with substantial mathematical and statistical baggage. Despite important differences between them, the versions developed in the USA and Italy can be treated jointly because they shared the same view of dynamics as an equilibrium phenomenon, in a sense that the movements of economic variables were not deviations from natural rates but could be considered as optimal choices given the constraints. In the United States, in a context still largely dominated by institutionalism, the dynamic equilibrium approach was carried forward by two mathematicians, G. Evans and C. Ross. In Italy, this strand of analysis became the principal area of inquiry for the Paretian School, which during the 1930s made major contributions with L. Amoroso, G. La Volpe and G. Palomba. In attempting to dynamize the general equilibrium this authors made important contributions manly in mathematical terms, introducing openly the functional calculus in economics dynamics, a tool which in the postwar period proved essential for research in this field of inquiry.