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Macrodynamic feedback interaction between trade and production

Some significant aspects of dynamic behaviour of price level and economic activity are directly related to macroeconomic interaction between trade and production feedback loops. It is shown how this simple interaction can give, and likely has given, rise to macroeconomic business cycles as well as to counter‐intuitively slow responses to disturbances or commands. It is suggested that many puzzling deviations from economic equilibrium are caused by nonlinear interaction between feedback loops with independent regulators in macro‐ and microeconomy. Copyright © 2006 John Wiley & Sons, Ltd.