Economic Evolution and Equilibrium: Bridging the Gap

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Springer Science & Business Media, Jun 10, 2007 - Business & Economics - 272 pages
theory,whichformalizesa dynamiceconomicsystemasa systemofdi?erence, or di?erential, equations. There equilibria mean ‘equilibrium trajectories’ of the whole evolution that, in a certain sense, are optimal. A particularly un- tisfactory feature of this conceptualization of an equilibrium, however, is the factthattheintertemporaloptimizingapproachcompletelypredeterminesthe whole future of the economic system. This “closed loop” approach gives rise to the common reproach that economic theory is predominantly concerned with the question of ‘how the economic system ought to behave’ rather than with the question of ‘how does it behave actually’. This is the point at which the new branch of evolutionary economics has made its entrance. In contrast to growth or business cycle theory, evolutionary economics perceives the evolution of the economic system as essentially “open” to true novelties that are unforeseeable by their very nature. This view clearly makes obsolete any conception of equilibrium that resorts to the idea of a ?nal state of rest, or to the idea of an intertemporally optimizing trajectory which is prespeci?ed ab initio by a system of di?erential equations and initial con- tions. To be sure, there have been attempts to reconceptualize the notion of equilibrium from the evolutionary viewpoint. However, these proposals also appear, in one way or another, to hinge on the ideas of rest. This parti- larly applies to the branch of nonlinear dynamics and deterministic chaotic motion.
 

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Contents

General Introduction
1
Notations and Mathematical Preliminaries
12
Conceptualization and Definition of Evolutions of Economies in Four General Equilibrium Frameworks
25
Introduction to Part I
27
Evolutions in the Traditional Walrasian Exchange Equilibrium Framework
29
41 Evolutions Based on the Model of an Exchange Economy by Arrow and Hahn
30
42 Evolutions Based on Dierkers Version of the Model of an Exchange Economy
34
43 Evolutions Based on a Model of a Large Exchange Economy
37
121 Course Evolutions and Connection Evolutions
142
122 New and Old Commodities
149
The Structure of the Equilibrium Price Set of an Evolution of Exchange Economies
154
Comparison With Related Results in the Literature
161
142 The Regular Approach
164
Conclusions
175
Economic Analysis
177
Introduction to Part III
178

Evolutions in an Exchange Equilibrium Framework Without Walras Law and Homogeneity
41
51 Evolutions Based on a Model of an Exchange Economy Without Walras Law and Homogeneity
42
52 Evolutions Based on a Model With Weakened Boundary Assumptions
54
Evolutions in a General Equilibrium Framework With Production Taxes and Subsidies
60
61 Evolutions Based on a General Equilibrium Model With Production and Taxes
62
62 Evolutions Based on a General Equilibrium Model With Production Taxes and Subsidies
68
Evolutions in the Temporary Fixprice Equilibrium Framework
71
71 Evolutions Based on a Quantity Constrained Micromodel With Effective Demand a la Benassy
72
72 Evolutions Based on a Quantity Constrained MultiSectoral Model
77
Conclusions
87
Formal Analysis
88
Introduction to Part II
89
NearEquilibrium Paths
95
101 Existence of Joining Equilibrium Components and of NearEquilibrium Paths for Each Type of Evolution From Part I
96
102 A Criterion for Identifying Points on Joining Equilibrium Components
103
Equilibrium Paths
105
111 Approximating Evolutions of Exchange Economies With Nice Equilibrium Paths Based on Dierkers Model from Section 42
106
1111 Polynomial Approximating Exchange Evolutions
107
1112 Piecewise Linear Approximating Exchange Evolutions
115
112 Approximating Evolutions With Equilibrium Paths for the Other Basic Models From Part I
120
113 A Strong Connectedness Result for the Graphs of the Equilibrium Correspondences of the Basic Models From Part I
126
Economic Refinements of the Notion of an Evolution of Economies
141
Applications of the Analytical Results From Part II in the Economists Laboratory
183
171 Extending the PathFollowing Method to the Computation of Equilibria of NonRegular Economies
184
172 Generalizing Comparative Statics to Economies With Multiple Equilibria
187
The Method of Kinetic Analysis of Evolving Economies in Historical Time
188
Evolving Economies in Historical Time
199
191 Evolving Economies in Discrete Historical Time
203
192 Alternative Models of Evolving Economies in Continuous Historical Time
204
1922 The Frequency Model of a Piecewise Continuously Balanced Evolving Economy
210
193 Time Consuming Equilibrium Adjustment Processes
214
194 Frictionless Tuning of Coordination Signals in Evolving Economies in Continuous Historical Time
217
1942 Frictionless Tuning in the Quantity Constrained MultiSectoral Model From Chapter 4
221
1943 Frictionless Tuning in the General Equilibrium Framework With Production Taxes and Subsidies From Chapter 3
222
Conclusions
223
General Conclusions and Outlook
225
General Conclusions and Outlook
226
Appendix A1
231
Appendix B
241
Appendix C
258
References
263
Subject Index
270
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