Virtuous circle and vicious circle: Encyclopedia - Virtuous circle and vicious circle

In many parts of economics there is an assumption that a complex system of determinants will tend to lead to a state of equilibrium. When this tendency is absent we use terms like virtuous circle and vicious circle (or virtuous cycle and vicious cycle) to describe these unstable pattern of events. Both circles are complexes of events with no tendency towards equilibrium (at least in the short run). Both systems of events have feedback loops in which each iteration of the cycle reinforces the first (positive feedback). The diffe

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