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General equilibrium theory is a central point of contention and influence between the neoclassical school and other schools of economic thought, and different schools have varied views on general equilibrium theory. Some, such as the Keynesian and Post-Keynesian schools, strongly reject general equilibrium theory as "misleading" and "useless".
where the economic meanings of and are the equilibrium prices of various goods and the equilibrium activity levels of various economic agents, respectively. We can further extend the von Neumann general equilibrium model to the following structural equilibrium model with A {\displaystyle \mathbf {A} } and B {\displaystyle \mathbf {B} } as ...
The classical general equilibrium model aims to describe the economy by aggregating the behavior of individuals and firms. [1] Note that the classical general equilibrium model is unrelated to classical economics, and was instead developed within neoclassical economics beginning in the late 19th century.
Dynamic stochastic general equilibrium modeling (abbreviated as DSGE, or DGE, or sometimes SDGE) is a macroeconomic method which is often employed by monetary and fiscal authorities for policy analysis, explaining historical time-series data, as well as future forecasting purposes. [1]
In mathematical economics, the Arrow–Debreu model is a theoretical general equilibrium model. It posits that under certain economic assumptions (convex preferences, perfect competition, and demand independence), there must be a set of prices such that aggregate supplies will equal aggregate demands for every commodity in the economy.
The Heckscher–Ohlin model (/hɛkʃr ʊˈliːn/, H–O model) is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics.
An economy is in general equilibrium if every market in the economy is in partial equilibrium. Not only must the market for cherries clear , but so too must all markets for all commodities (apples, automobiles, etc.) and for all resources (labor and economic capital) and for all financial assets, including stocks, bonds, and money.
In other words, Sonnenschein–Mantel–Debreu raises questions about the degree to which general equilibrium theory can produce testable predictions about aggregate market variables. [ 21 ] [ 22 ] For this reason, Andreu Mas-Colell referred to the theorem as the “Anything Goes Theorem” in his graduate-level microeconomics textbook. [ 22 ]