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The Gravitation of Market Prices as A Stochastic Process
Author(s) -
Fratini Saverio M.,
Naccarato Alessia
Publication year - 2016
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12116
Subject(s) - economics , position (finance) , infinity , value (mathematics) , set (abstract data type) , natural (archaeology) , mathematical economics , process (computing) , microeconomics , keynesian economics , econometrics , mathematics , computer science , statistics , finance , geology , mathematical analysis , programming language , operating system , paleontology
The theory of value has been based ever since Adam Smith on the idea that the market prices of commodities, those at which actual trade takes place, gravitate around a central position known as natural prices. This article seeks to develop a statistical idea of the process in question and suggests in particular that market prices can be said to gravitate around natural prices if the probability of their means being very close to natural prices after t observations tends to 1 as t tends to infinity. A set of possible conditions leading to that result is also presented.