The Gravitation of Market Prices as a Stochastic Process

19 Pages Posted: 4 Oct 2016

See all articles by Saverio M. Fratini

Saverio M. Fratini

University of Rome III

Alessia Naccarato

University of Rome III - Department of Economics

Date Written: November 2016

Abstract

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.

Suggested Citation

Fratini, Saverio M. and Naccarato, Alessia, The Gravitation of Market Prices as a Stochastic Process (November 2016). Metroeconomica, Vol. 67, Issue 4, pp. 698-716, 2016, Available at SSRN: https://ssrn.com/abstract=2847407 or http://dx.doi.org/10.1111/meca.12116

Saverio M. Fratini (Contact Author)

University of Rome III

Alessia Naccarato

University of Rome III - Department of Economics ( email )

Via Ostiense, 169
Rome, 00154
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
190
PlumX Metrics