Widening General Equilibrium Theory

Abstract

Both in § 1.3 and in Ch.3 we have already dealt with one period competitive general equilibrium, Walrasian general equilibrium for short. It is now time to consider a very important extension of this theory to a sequence of time periods, by presenting a framework known as temporary competitive general equilibrium, or temporary equilibrium for short. The founding father of temporary equilibrium is the Swedish economist Lindahl (1929, 1939a), a member of the Stockholm School, while Hicks (1939, 1946) spread this notion in the English speaking world, that is, everywhere. Although he did not even quote Lindahl in his book, many years later Hicks acknowledged his indebtedness to the Swedish scholar,¹ whose name was not mentioned by Hicks (1939), despite the fact that the two became friends in the early Thirties.