Talk:General equilibrium theory

message: Primary objective of an encyclopedia page is to explain in simple layman's terms the key concepts of the topic.  In that context, this page has failed it's mission.  --Sahir 06:20, 14 March 2016 (UTC)
thread_title: Complete rewrite required

message: Maybe this is the wrong place for it, but I am a neophyte trying to get a basic understanding of how GET works. The text mentions that GET implicitly assumes complete markets and perfect information, but if the article discusses the explicit assumptions and why they are necessary, I missed it in my skim. Maybe I'll find some clues in the "further reading" section.  — Preceding unsigned comment added by 128.171.156.23 (talk) 19:49, 30 August 2017 (UTC)
thread_title: Assumptions?

message: "Under the assumptions above, any market equilibrium is tautologically efficient. Therefore, when equilibria arise that are not efficient, the market system itself is not to blame, but rather some sort of market failure."
Two things confuse me about these statements. 1) If equilibria are tautologically efficient, that means that all equilibria are efficient by definition. So these statements reduce to "if something that is efficient is not efficient then ..." which is nonsense. Have the assumptions been violated? What is really going on? 2) How does it make sense to say that market failure does not place blame on the market system? I actually agree that externalities represent a failure of government to enforce property rights and hence is not market failure, but this is an unconventional view. Most people think of all market failures as failures of the market system.  — Preceding unsigned comment added by 128.171.156.23 (talk) 19:36, 30 August 2017 (UTC)
thread_title: Confusing statements

message: General equilibrium theory not only is not restricted to find existence of a set of prices which clear the market, but also compare the welfare in different scenarios. The famous theory such as second best,  quota rent seeking model should be mentioned. The field defined in the opening speech is too narrow.
--PlasticTone (talk) 15:55, 18 May 2013 (UTC)
thread_title: Field of General equilibrium theory

message: In this view, static equilbrium is totally unsuited for modelling real economies, apart perhaps from traditional societies which have remained stable for centuries.
:By "traditional" are we talking the time of Adam Smith, or Ancient Greece, or what? I'm curious what might be considered a successful application of static equilibrium analysis to a traditional society. If there are no alleged successes along these lines, perhaps even this claim about static equilibrium analysis is too optimistic, and should be toned down. --Ryguasu
"Some think this implies that the Arrow-Debreu model lacks empirical content. At any rate, Arrow-Debreu equilibria cannot be expected to be unique, stable, or determinate." 
I removed "determinate" as I think it doesn't belong here. The SMD does imply that uniqueness or tatonnement stability is not guaranteed but it doesn't say anything about local uniqueness - which is what I understand 'determinate' to refer to. In fact the index theorem tells us that the number of equilibria is finite and odd (so no continuums). Some folks do think that this gives back some empirical relevence to GE - as long as shocks are not too large we can just focus on local equilibria -- Radek
Radek, I think you are mistaken. Recall that the Arrow-Debreu model uses topological arguments. It is thus supposed to be consistent with a generalized Leontief technology, in which firms in each industry choose among (linear combinations of) fixed coefficient processes. It is my understanding that in this case, Arrow-Debreu equilibrium paths can be indeterminate, that is, lie along a continuum. (You're correct about the meaning of the term "determinate". If I recall correctly, Dixit, for example, argues this conclusion in a late 1970s paper in Oxford Economic Papers.
You may be correct in that this is not an implication of the SMD results. I did not change the page because I am not totally confident of my position here.
-- RLV
There may be something to what you say, but I can't find the Dixit paper you refer to. Here's
all Dixit's papers from OEP, if you have JSTOR access:
http://www.jstor.org/search/AdvancedSearch?si=1&hp=25&All=dixit&Exact=&One=&None=&Search=Search&au=on&sd=&ed=&jt=Oxford+Economic+Papers
The only one that appears to be relevant here is "The Accumulation of Capital Theory" (partly a book review). Skimming it quickly I don't see its connection. The only 'indeterminancy' that shows up there is the usual indeterminacy of the prices due to Walras' Law (you get a normalization). I'll read it more carefully though. And I'm pretty sure that indeterminacy is not an implication of SMD. Usually when it pops up it's in some kind of intertemporal setting with funky capital accumulation (like in a weird OLG model).
Oh, and with respect to your other edit, I'd use the term "strong" rather than "arbitrary" in the sentence "As well as arbitrary restrictions on excess demand functions..." since the restrictions do have an economic interpretation in terms of the weak axiom or whatever, hence are not arbitrary, just very strong.radek
Radek, I'm glad that you expanded on the two fundamental theorems. I added something about indeterminacy that seems to be in tension with your comments on the index theorem. You might find the Mandler reference of interest. (He's written about this elsewhere, too.)
Ok, that sounds about right - with production (especially non convexities) and time weird things can happen. Thanks for the pointer, I'll check that paper out. radek 02:07, 15 February 2006 (UTC)
thread_title: old unsectioned comments

message: I removed the sentence "Many think Walras was unsuccessful and the later models in this series inconsistent." since "many think" is very umbigous and sort of, well, weasely. Who are these many? Citations? References? (And unsuccesful /= some people don't like it) I replaced it with a short description of what Walras got wrong. I can't be sure that this is what the original referred to so please, discuss here, or clarify in the main article. Same with regards to "inconsistent" - however, if by this is just meant that Walras' didn't solve every general equilibrium problem that can possibly arise, I think it'd be better to just leave it out.radek 21:40, 25 December 2005 (UTC)
thread_title: Changes in section on Walras

message: I added a sentence refering to some results in experimental economics in the Unresolved Problems section, but I'm not entirely satisfied with the setting. Genererally Vernon-Smith type results are more applicable to Partial rather than General equilibrium models (for obvious reasons) so I'm not sure it's completely relevant. On the other hand the criticism was the standard one about rationality, information and competition being unrealistic assumptions and Smith's experimental work suggests for whatever reason markets do tend to function as if these assumptions held. So it addresses the criticism. Thoughts and edits are appreciated.radek 03:38, 19 March 2006 (UTC)
thread_title: Experimental economics

message: "Georgescu-Roegen cites as an example a paper that assumes more traders in existence than there are points in the set of real numbers." - What is the paper that GR is referring to? I'm suspicious that it should be "integers" or "rational numbers" (i.e. that the paper assumes there's a continuum of traders) rather than "real numbers".radek (talk) 15:52, 6 December 2007 (UTC)
replies: text: Yes, it would be interesting to see what exactly is meant by that... I'm a mathematics student so I don't know exactly what is the important point, but perhaps there's something to do with dealing with a subset A\subseteq \Omega in general, with \Omega=\mathbb{R} just being an "interesting example"... which is the most obvious example of "exercises in pure mathematics with no connection to actual economies".  118.90.66.84 (talk) 12:30, 20 August 2008 (UTC)
thread_title: Just wondering

message: ===Introductory paragraph===
I find the last part of the introductory paragraph ("... and attempts were made to solve for general equilibrium prices and quantities empirically.") unclear. "Empirically" relates to the data base used for the models, but the process of solving the model is better characterised as "numerically". I try to make this clear in the alternative formulation below.
I think it's also nice to have a short list of typical applications. This is also added in the suggestion below. I'm unsure, however, whether it's a good idea to drop names. It makes the list more concrete, but it depends on whether there is sufficient agreement on which names to list. I made suggestions for three fields, in international trade I'm uncertain.
Suggestion for a new version of the first paragraph: "Until the 1970s, general equilibrium analysis remained theoretical. However, with advances in computing power, and the development of input-output tables, it became possible to model national economies, or even the world economy. This means that the theoretical structure of a general equilibrium model is combined with empirical data, and the actual situation (as represented by the data) is interpreted as an equilibrium. The change in equilibrium prices and quantities as a reaction to a shift in an exogenous (policy) variable can then be calculated numerically. Important fields of application have been tax policy (Shoven and Whalley), international trade policy (...), energy and climate policy (Nordhaus) and population ageing and pension policy (Auerbach and Kotlikoff)." Stefan Boeters (talk) 09:39, 17 October 2008 (UTC)
thread_title: Computing general equilibrium

message: I find the last part of the introductory paragraph ("... and attempts were made to solve for general equilibrium prices and quantities empirically.") unclear. "Empirically" relates to the data base used for the models, but the process of solving the model is better characterised as "numerically". I try to make this clear in the alternative formulation below.
I think it's also nice to have a short list of typical applications. This is also added in the suggestion below. I'm unsure, however, whether it's a good idea to drop names. It makes the list more concrete, but it depends on whether there is sufficient agreement on which names to list. I made suggestions for three fields, in international trade I'm uncertain.
Suggestion for a new version of the first paragraph: "Until the 1970s, general equilibrium analysis remained theoretical. However, with advances in computing power, and the development of input-output tables, it became possible to model national economies, or even the world economy. This means that the theoretical structure of a general equilibrium model is combined with empirical data, and the actual situation (as represented by the data) is interpreted as an equilibrium. The change in equilibrium prices and quantities as a reaction to a shift in an exogenous (policy) variable can then be calculated numerically. Important fields of application have been tax policy (Shoven and Whalley), international trade policy (...), energy and climate policy (Nordhaus) and population ageing and pension policy (Auerbach and Kotlikoff)." Stefan Boeters (talk) 09:39, 17 October 2008 (UTC)
thread_title: Introductory paragraph

message: The second and third paragraph on AGE and CGE models heavily relies on the discussion paper of Mitra-Kahn (2008), which claims that there is a substantial difference between the two strands. Only then the formulation "Computable general equilibrium (CGE) models surpassed and replaced AGE models in the mid 1980s." makes sense. A more traditional view would be that in the 70s there were parallel, independent developments in CGE/AGE modelling, which, by chance, chose different names for what they were doing. In the 80s, these strands converged and "AGE"/"CGE" became to be used interchangeably.
In particular, I find two formulations in the current version dubious: (1) "In the 1980's however, AGE models faded from popularity due to their inability to provide a precise solution and its high cost of computation." If I see it correctly, it was the use of the Scarf solution algorithm that faded. We should clearly distinguish between the model to be solved and the algorithm used. There has been a lot of development of algorithms without much change in the models themselves.
(2) "... and the CGE literature at current is not based on Arrow-Debreu and General Equilibrium Theory." What is the basis of this claim? I tend to think that it is wrong. At least what follows gives no clear indication: "CGE models [...] are based on static, simultaneously solved, macro balancing equations..." -- The "static" claim is dubious in itself (there do exist many dynamic CGE models, and it is not clear how they can be based on "static macro balancing equations"). "Simultaenously solved" does not separate these models from general equilibrium theory. So "based on macro balancing equations" remains the only candidate. But how should this establish a contrast with general equilibrium theory? CGE models do contain macro balancing equations, but they are only a small subset of all equations. And general equilibrium theory certainly implies some macro equalities as well. 
If agreement on these points can be reached, I tend to reduce the AGE/CGE distinction to a brief historical and terminological footnote and merge the two articles on "Applied general equilibrium" and "Computable general equilibrium". Stefan Boeters (talk) 09:39, 17 October 2008 (UTC)
thread_title: AGE/CGE distinction

message: Dr. Berliant has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
Dr. Berliant has published scholarly research which seems to be relevant to this Wikipedia article:
*Reference : Berliant, Marcus & Yu, Chia-Ming, 2009. "Rational expectations in urban economics," MPRA Paper 12709, University Library of Munich, Germany.
ExpertIdeasBot (talk) 02:59, 28 May 2016 (UTC)
thread_title:  Dr. Berliant's comment on this article 

message: Dr. Bonnisseau has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
We believe Dr. Bonnisseau has expertise on the topic of this article, since he has published relevant scholarly research:
*Reference 1: Jean-Marc Bonnisseau & Bernard Cornet, 2006. "Existence of equilibria with a tight marginal," Cahiers de la Maison des Sciences Economiques b06022, Universite Pantheon-Sorbonne (Paris 1).
*Reference 2: Jean-Marc Bonnisseau & Alexandrine Jamin, 2004. "General equilibrium theory and increasing returns : an alternative to the survival assumption," Cahiers de la Maison des Sciences Economiques b04017, Universite Pantheon-Sorbonne (Paris 1).
ExpertIdeasBot (talk) 15:50, 24 August 2016 (UTC)
thread_title:  Dr. Bonnisseau's comment on this article 

message: Dr. Colciago has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
We believe Dr. Colciago has expertise on the topic of this article, since he has published relevant scholarly research:
*Reference : Colciago, Andrea, 2005. "Rule of Thumb Consumers Meet Sticky Wages," MPRA Paper 3275, University Library of Munich, Germany, revised 27 Apr 2007.
ExpertIdeasBot (talk) 20:04, 24 September 2016 (UTC)
thread_title:  Dr. Colciago's comment on this article