computation of general equilibria

Herbert E. Scarf
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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How 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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Table of Contents

  • Abstract
  • Keywords
  • Article
    • The use of fixed-point theorems in equilibrium analysis
    • The equilibrium model as a tool for policy evaluation
    • An elementary algorithm
    • Improvements in the algorithm
    • Applied general equilibrium analysis
  • See Also
  • Bibliography
  • How to cite this article
 
 

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