computation of general equilibria
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by
Steven
N.
Durlauf and
Lawrence
E.
Blume
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Abstract
The Walrasian model of economic equilibrium is a generalization to the entire economy of the basic notion that prices move to levels that equilibrate supply and demand. Although the model avoids some factors of economic significance, it is extremely useful in helping us evaluate the effects of changes in economic policy or the economic environment. A moderately realistic model designed to illustrate a significant economic issue typically involves a large system of highly nonlinear equations and inequalities. Existence of a solution is demonstrated by non-constructive fixed point theorems. The explicit numerical solution of such a model requires sophisticated computational techniques.
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Keywords
Arrow–Debreu model; Barone, E.; Brouwer's fixed-point theorem; Cobb–Douglas function; computation of general equilibria; general equilibrium; Harberger, A.; Johansen, L.; Kakutani's fixed-point theorem; Kuhn–Tucker Theorem; Lange, O.; non-convexity; Sperner's lemma; technical coefficients of production; uncertainty; Walras's Law; Walrasian modelHow to cite this article
Scarf, Herbert E. "computation of general equilibria." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 23 May 2009 <http://www.dictionaryofeconomics.com/article?id=pde2008_C000573> doi:10.1057/9780230226203.0283
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