Abstract
Comparative statics in competitive general equilibrium (GE) environments provide insight into the operation of GE models and a means to confront GE models with data. This article focuses on a canonical comparative statics prediction: in an exchange economy, aggregate endowment changes are negatively related to equilibrium price changes. In particular, an increase in the aggregate endowment of a commodity lowers its equilibrium price.
Keywords
- Aggregate excess demand
- Asset pricing
- Comparative statics
- Competitive general equilibrium
- Debreu–Mantel–Sonnenschein theorem
- Demand shocks
- Endowment changes
- General equilibrium
- Gross substitutes
- Hicks, J.
- Partial equilibrium
- Production economies
- Rybcyznski theorem
- Stolper–Samuelson theorem
- Supply shocks
- Weak axiom of revealed preference
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Nachbar, J. (2018). Comparative Statics. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_322
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DOI: https://doi.org/10.1057/978-1-349-95189-5_322
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Print ISBN: 978-1-349-95188-8
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