The role of mathematics in economic analysis is not yet a settled question. Smith, Ricardo, Mill and other eminent classical economists did not use mathematics in their economic theorizations. We have defined classical mathematical economics as the whole body of literature in mathematical treatment of economics originating mainly from the contributions of Cournot,  Jevons and Walras. There are ...

The objective of this note is to show that the positively valued excess supplies which Aiyagari (1992) connects with Pareto inefficiency for overlapping generations economies represent an economic opportunity that can potentially be exploited by government or by a private financial intermediary through the issuance of unsecured debt. We demonstrate that, when unsecured debt is issued, Walras’ L...

The main contribution of the paper is to provide a weaker nonsatiation assumption than the one commonly used in the literature to ensure the existence of competitive equilibrium. Our assumption allows for satiation points inside the set of individually feasible consumptions, provided that the consumer has satiation points available to him outside this set. As a result, we show the concept of eq...

Walrasian tâtonnement has been a fundamental assumption in economics ever since Walras’ general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tâtonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in “double-auction” markets. I make a next step in this evolution by e...

We characterize the Pareto correspondence, the core and the Walras solution using the axioms of consistency, converse consistency and one-person rationality. Consistency and its converse are defined with respect to suitably constructed reduced economies for each case. Our results hold for the well-known class of coalitional production economies, which covers exchange economies as a particular c...

This paper explores the relationship between a firm’s investments in ‘capability building’, and its prospects for survival. The analysis is carried out using a model of Knightian uncertainty which differs from the standard ‘subjective probability’ approaches in a number of fundamental respects. ∗ Walras-Bowley Lecture, Econometric Society, 2004. This lecture was subsequently presented at the UC...