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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".
Under general equilibrium theory prices are determined through market pricing by supply and demand. [6] Here asset prices jointly satisfy the requirement that the quantities of each asset supplied and the quantities demanded must be equal at that price - so called market clearing.
Partial equilibrium, the equilibrium price and quantity which come from the cross of supply and demand in a competitive market; Radner equilibrium, an economic concept defined by economist Roy Radner in the context of general equilibrium; Recursive competitive equilibrium, an economic equilibrium concept associated with a dynamic program
It was the general equilibrium obtained from a single hypothesis, rarity, that led Joseph Schumpeter to consider him "the greatest of all economists". The notion of general equilibrium was very quickly adopted by major economists such as Vilfredo Pareto, Knut Wicksell and Gustav Cassel.
Walras's law is a principle in general equilibrium theory asserting that budget constraints imply that the values of excess demand (or, conversely, excess market supplies) must sum to zero regardless of whether the prices are general equilibrium prices.
In general equilibrium theory in economics, Kakutani's theorem has been used to prove the existence of set of prices which simultaneously equate supply with demand in all markets of an economy. [6] The existence of such prices had been an open question in economics going back to at least Walras.
In Walrasian general equilibrium, prices are adjusted through a tâtonnement ('groping') process: the rate of change for any commodity’s price is proportional to the excess demand for the commodity, and no trades take place until equilibrium prices have been reached. This may not be realistic, but it is mathematically tractable: it makes ...
Computable general equilibrium (CGE) models are a class of economic models that use actual economic data to estimate how an economy might react to changes in policy, technology or other external factors.