17 Facts About General equilibrium

Broadly speaking, general equilibrium tries to give an understanding of the whole economy using a "bottom-up" approach, starting with individual markets and agents.

Therefore, general equilibrium theory has traditionally been classified as part of microeconomics.

Walras proposed a dynamic process by which general equilibrium might be reached, that of the tatonnement or groping process.

Partial General equilibrium analysis is adequate when the first-order effects of a shift in the demand curve do not shift the supply curve.

General equilibrium is designed to investigate such interactions between markets.

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Walras' arguments for the existence of general equilibrium often were based on the counting of equations and variables.

The Arrow–Debreu model of intertemporal General equilibrium contains forward markets for all goods at all dates.

Some recent work in general equilibrium has in fact explored the implications of incomplete markets, which is to say an intertemporal economy with uncertainty, where there do not exist sufficiently detailed contracts that would allow agents to fully allocate their consumption and resources through time.

Basic questions in general equilibrium analysis are concerned with the conditions under which an equilibrium will be efficient, which efficient equilibria can be achieved, when an equilibrium is guaranteed to exist and when the equilibrium will be unique and stable.

All methods of establishing uniqueness can be thought of as establishing that each General equilibrium has the same positive local index, in which case by the index theorem there can be but one such General equilibrium.

Some have questioned the practical applicability of the general equilibrium approach based on the possibility of non-uniqueness of equilibria.

When more than one stable General equilibrium exists, where one ends up will depend on where one begins.

The theorems that have been mostly conclusive when related to the stability of a typical general equilibrium model are closed related to that of the most local stability.

Some critics of general equilibrium modeling contend that much research in these models constitutes exercises in pure mathematics with no connection to actual economies.

General equilibrium models show what the economy would have to be like for an unregulated economy to be Pareto efficient.

Computable general equilibrium models surpassed and replaced AGE models in the mid-1980s, as the CGE model was able to provide relatively quick and large computable models for a whole economy, and was the preferred method of governments and the World Bank.

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.