János Kornai and general equilibrium theory

2 General Equilibrium Theory

Here we briefly review the general equilibrium theory, which is pretty traditional: preference and the concept of ordinal utility, demand and comparative statics, the definition of Arrow–Debreu equilibrium, Pareto efficiency and welfare theorems, welfare comparison and compensation principle, and incomplete asset markets. As they are standard, they are presented without proofs. For a comprehens...

General equilibrium theory Lecture notes

‘Consistency and Incompleteness in General Equilibrium Theory

We consider the implications for general equilibrium theory of the problems of consistency and completeness as shown in the Gödel-Rosser theorems of the 1930s. That a sufficiently rigorous consistent system is incomplete poses serious problems for dealing with unresolved problems in a fully formal system such as general equilibrium theory. We review the underlying mathematical issues and apply ...

Classical thermodynamics and economic general equilibrium theory

A long history of analogy making between neoclassical economics and physical thermodynamics has unfortunately served to obscure two important relations between the two fields: their definitions of equilibria stem from essentially the same three axioms for the mathematical representations of systems, while the classes of transformation each has chosen to emphasize, and their responses to the pro...

Intertemporal general equilibrium and monetary theory 1

The introduction of banks that issue money and supply balances and pay out their profits as dividends is the natural modification of the model of general competitive equilibrium that encompasses monetary economies. Competitive equilibria exist. Nevertheless, eventhough there is a well defined money market, competitive equilibrium allocations are indeterminate. On an event tree with N nodes, of ...