The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

General Equilibrium

  • Lionel W. McKenzie
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_933

Abstract

Unlike partial equilibrium theory, general equilibrium theory treats as constant only non-economic influences and embraces all sales and purchases of all agents involved in exchanges. It implies that all subsets of agents are in equilibrium and that all individual agents are in equilibrium. The development of a formal general equilibrium theory in mathematical terms was initiated in the 19th century by Walras, who moved from a model of an exchange economy to an equilibrium with production. It was completed in the 1950s by McKenzie, who formalized Walrasian theory, and by Arrow and Debreu, who formalized Hicksian theory.

Keywords

Arrow, K. Arrow–Debreu model Competitive equilibrium Convexity Cournot, A. Debreu, G. Equilibrium of production Equilibrium over time Existence of general equilibrium General equilibrium Hicks, J. Jevons, W. Marshall, A. Menger, C. Mill, J. S. Monetary equilibrium Overlapping generations model of general equilibrium Pareto efficiency Pareto, V. Partial equilibrium Poinsot, L. Rational expectations Samuelson, P. Smith, A. Temporary equilibrium von Neumann’s Law Wald’s Law Walras, L. Walras’s Law Walras’s theory of investment 

JEL Classifications

D5 
This is a preview of subscription content, log in to check access.

Bibliography

  1. Allingham, M. 1975. General equilibrium. New York: Wiley.Google Scholar
  2. de Araujo, A.P., and J.A. Scheinkman. 1979. Notes on comparative dynamics. In General equilibrium, growth, and trade, ed. J.R. Green and J.A. Scheinkman. New York: Academic.Google Scholar
  3. Arrow, K.J. 1951. An extension of the basic theorems of classical welfare economics. In Proceedings of the second Berkeley symposium, ed. J. Neyman. Berkeley: University of California Press.Google Scholar
  4. Arrow, K.J. 1953. Le rôle des valeurs boursières pour la répartition la meilleure des risques. Econométrie, Paris: Centre National de la Recherche Scientifique. Trans. as ‘The role of securities in the optimal allocation of risk-bearing’, Review of Economic Studies 31 (1964): 91–96.Google Scholar
  5. Arrow, K.J., and G. Debreu. 1954. Existence of an equilibrium for a competitive economy. Econometrica 22: 265–290.CrossRefGoogle Scholar
  6. Arrow, K.J., and L. Hurwicz. 1958. On the stability of the competitive equilibrium I. Econometrica 26: 522–552.CrossRefGoogle Scholar
  7. Arrow, K.J., H.D. Block, and L. Hurwicz. 1959. On the stability of the competitive equilibrium II. Econometrica 27: 82–109.CrossRefGoogle Scholar
  8. Balasko, Y., and K. Shell. 1980. The overlapping generations model, I: The case of pure exchange without money. Journal of Economic Theory 23: 281–306.CrossRefGoogle Scholar
  9. Balasko, Y., D. Cass, and K. Shell. 1980. Existence of competitive equilibrium in a general overlapping generations model. Journal of Economic Theory 23: 307–322.CrossRefGoogle Scholar
  10. Bewley, T.F. 1972. Existence of equilibria in economies with infinitely many commodities. Journal of Economic Theory 4: 514–540.CrossRefGoogle Scholar
  11. Bewley, T.F. 1982. An integration of equilibrium theory and turnpike theory. Journal of Mathematical Economics 10: 233–268.CrossRefGoogle Scholar
  12. Cassel, G. 1918. Theoretische Sozialökonomie. 5th German edn, trans. as The theory of social economy. New York: Harcourt Brace, 1932.Google Scholar
  13. Cournot, A. 1838. Recherches sur les principes mathématiques de la théorie des richesses. Paris: Hachette. Trans. as Researches into the mathematical principles of the theory of wealth. New York: Kelley, 1960.Google Scholar
  14. Debreu, G. 1954. Valuation equilibrium and Pareto optimum. Proceedings of the National Academy of Sciences 40: 588–592.CrossRefGoogle Scholar
  15. Debreu, G. 1959. Theory of value. New York: Wiley.Google Scholar
  16. Debreu, G. 1962. New concepts and techniques for equilibrium analysis. International Economic Review 3: 257–273.CrossRefGoogle Scholar
  17. Gossen, H. 1854. Entwicklung der Gesetze des menschlichen Verkehrs. 3rd ed, 1927. Berlin: Prager.Google Scholar
  18. Grandmont, J.M. 1973. On the efficiency of a monetary equilibrium. Review of Economic Studies 40: 149–165.CrossRefGoogle Scholar
  19. Grandmont, J.M. 1977. Temporary general equilibrium theory. Econometrica 45: 535–572.CrossRefGoogle Scholar
  20. Grandmont, J.M. 1983. Money and value. New York: Cambridge University Press.CrossRefGoogle Scholar
  21. Grandmont, J.M., and Y. Younes. 1972. On the role of money and the existence of a monetary equilibrium. Review of Economic Studies 39: 355–372.CrossRefGoogle Scholar
  22. Green, J.R. 1973. Temporary general equilibrium in a sequential trading model with spot and future transactions. Econometrica 41: 1103–1123.CrossRefGoogle Scholar
  23. Green, J.R. 1977. The nonexistence of informational equilibria. Review of Economic Studies 44: 451–463.CrossRefGoogle Scholar
  24. Grossman, S.J. 1981. An introduction to the theory of rational expectations under asymmetric information. Review of Economic Studies 48: 541–560.CrossRefGoogle Scholar
  25. Hahn, F.H., and T. Negishi. 1962. A theorem on non-tâtonnement stability. Econometrica 30: 463–469.CrossRefGoogle Scholar
  26. Hicks, J.R. 1939. Value and capital. Oxford: Clarendon Press.Google Scholar
  27. Jevons, W.S. 1871. The theory of political economy. 5th ed. London: Macmillan. New York: Kelley and Millman, 1957.Google Scholar
  28. Koopmans, T.C. 1951. Analysis of production as an efficient combination of activities. In Activity analysis of production and allocation, ed. T.C. Koopmans. New York: Wiley.Google Scholar
  29. Kreps, D.M. 1977. A note on fulfilled expectations equilibria. Journal of Economic Theory 14: 32–43.CrossRefGoogle Scholar
  30. Marshall, A. 1890. Principles of economics. 8th ed, 1920. London: Macmillan.Google Scholar
  31. McKenzie, L.W. 1954. On equilibrium in Graham’s model of world trade and other competitive systems. Econometrica 22: 147–161.CrossRefGoogle Scholar
  32. McKenzie, L.W. 1959. On the existence of general equilibrium for a competitive market. Econometrica 27: 54–71.CrossRefGoogle Scholar
  33. McKenzie, L.W. 1981. The classical theorem on existence of competitive equilibrium. Econometrica 49: 819–841.CrossRefGoogle Scholar
  34. Menger, C. 1871. Grundsätze der Volkswirtschaflehre. Vienna. Trans. as Principles of economics. Glencoe: Free Press, 1950.Google Scholar
  35. Mill, J.S. 1848. Principles of political economy. London: Parker. New ed. London: Longmans, 1909.Google Scholar
  36. Negishi, T. 1960. Welfare economics and existence of an equilibrium for a competitive economy. Metroeconomica 12: 92–97.CrossRefGoogle Scholar
  37. von Neumann, J. 1937. Über ein Ökonomisches Gleichungssystem und eine Verallgemeinerung des Brouwerschen Fixpunktsatzes. Ergebnisse eines Mathematischen Kolloquiums 8: 73–83. Trans. in Review of Economic Studies 13, (1945): 1–9.Google Scholar
  38. Nikaido, H. 1956. On the classical multilateral exchange problem. Metroeconomica 8: 135–145.CrossRefGoogle Scholar
  39. Novshek, W., and H. Sonnenschein. 1980. Small efficient scale as a foundation for Walrasian equilibrium. Journal of Economic Theory 22: 243–255.CrossRefGoogle Scholar
  40. Pareto, V. 1909. Manuel d’économie politique. Paris. Trans. from 1927 edn as Manual of political economy. New York: Kelley, 1971.Google Scholar
  41. Peleg, B., and M.E. Yaari. 1970. Markets with countably many commodities. International Economic Review 11: 369–377.CrossRefGoogle Scholar
  42. Poinsot, L. 1803. Eléments de statique. 8th ed. Paris, 1842.Google Scholar
  43. Radner, R. 1967. Equilibre des marchés à terme et au comptant en cas d’incertitude. Cahiers d’Econométrie 4: 35–52. Paris: CNRS.Google Scholar
  44. Radner, R. 1972. Existence of equilibrium of plans, prices and price expectations in a sequence of markets. Econometrica 40: 289–303.CrossRefGoogle Scholar
  45. Samuelson, P.A. 1947. Foundations of economic analysis. Cambridge, MA: Harvard University Press.Google Scholar
  46. Samuelson, P.A. 1958. An exact consumption – loan model of interest with or without the social contrivance of money. Journal of Political Economy 66: 467–482.CrossRefGoogle Scholar
  47. Scarf, H.F. (With T. Hansen) 1973. The computation of economic equilibria. New Haven: Yale University Press.Google Scholar
  48. Smith, A. 1776. In An inquiry into the nature and causes of the wealth of nations, ed. E. Cannan, 5th ed. London: Methuen. 1906.Google Scholar
  49. Wald, A. 1935. Über die eindeutige positive Losbarkeit der neuen Produktionsgleichungen. Ergebnisse eines mathematischen Kolloquiums 6: 12–20.Google Scholar
  50. Wald, A. 1936. Über einige Gleichungssysteme der mathematischen Ökonomie. Zeitschrift für Nationalökonomie 7: 637–670. Trans. as ‘On some systems of equations of mathematical economics’, Econometrica 19, (1951): 368–403.CrossRefGoogle Scholar
  51. Walras, L. 1874–7. Elements déconomie politique pure. Lausanne: Corbaz. Trans. by W. Jaffé as Elements of pure economics. London: George Allen & Unwin, from the 1926 definitive edition, 1954.Google Scholar
  52. Weintraub, E.R. 1983. On the existence of a competitive equilibrium: 1930–1954. Journal of Economic Literature 21: 1–39.Google Scholar
  53. Wilson, C.A. 1981. Equilibrium in dynamic models with an infinity of agents. Journal of Economic Theory 24: 95–111.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Lionel W. McKenzie
    • 1
  1. 1.