A NOTE ON THE CONCEPT OF APPROXIMATE EQUILIBRIUM IN ECONOMIC THEORY

2012 ◽  
Vol 08 (01) ◽  
pp. 95-100
Author(s):  
DUNCAN K. FOLEY
Keyword(s):  
Economic Theory ◽  
Competitive Equilibrium ◽  
Point Of View ◽  
Economic Welfare ◽  
Market Exchange ◽  
Market Clearing ◽  
Approximate Equilibrium ◽  
Path Dependent ◽  
Decentralized Market ◽  
Walrasian Competitive Equilibrium

The problem of the computability of Walrasian competitive equilibrium is considered from the point of view of concepts of approximate equilibrium. Neither the market-clearing nor Negishi approaches to the proof of existence of Walrasian competitive equilibrium give rise to adequately robust notions of approximate equilibrium. This explains the non-computability of Walrasian competitive equilibrium. The problem lies in the economic conception of markets, in particular the inconsistent treatment of information underlying the Walrasian definition. When trade takes place at disequilibrium prices decentralized market exchange redistributes income and economic welfare, and its equilibrium is path-dependent. The set of such equilibrium outcomes, however, in contrast to the Walrasian competitive equilibrium, is constructive and computable.

Whatever Happened to the Cambridge Capital Theory Controversies? (With comments by L. Pasinetti, F. Fisher, J. Felipe and J. McCombie, R. Greenfield and reply by the authors)

2009 ◽  
pp. 4-27
Author(s):  
A. Cohen ◽  
G. Harcourt
Keyword(s):  
Economic Theory ◽  
Economic Thought ◽  
Point Of View ◽  
Chronological Order ◽  
Capital Theory

The article written by the well-known theorists and historians of economic thought contains a detailed overview of the Cambridge capital controversy, which had raged from the mid-1950-s through the mid-1970-s. The authors track the origins of the controversy and cover arguments of both sides in chronological order. From their point of view, the discussion hasnt been resolved, and its main underlying aspects were ideological beliefs and fundamental methodological controversies on the nature of equilibrium and on the role of time in economic theory. The article is published with comments written by other leading theoreticians.

scholarly journals On Heaven’s Lathe: State, Rule of Law, and Economic Development

2015 ◽  
Vol 8 (1) ◽  
Author(s):  
Ding Chen ◽  
Simon Deakin
Keyword(s):  
Rule Of Law ◽  
Market Exchange ◽  
Limiting State ◽  
Middle Income ◽  
The Rule Of Law ◽  
Legal Rules ◽  
Middle Income Countries ◽  
Shareholder Protection ◽  
Private Interests ◽  
Path Dependent

AbstractWe propose a theoretical framework for understanding the evolution of the rule of law state, which is conceived as the equilibrium of a societal game in which actors accept the legitimacy of publicly enunciated legal rules. A meta-norm of respect for the sovereign legal power of the state is not self-forming on the basis of private conduct, but requires the coevolution of impersonal market exchange with effective state capacity to constitute and regulate markets. A functioning legal system must acquire the means not just to control private power but to constrain other organs of government. The emergence of such a ‘self-limiting state’ is an historical process which, while complementary to a market order, is also contingent and path-dependent, and is not preordained. Illustrating our argument with empirical evidence drawn from the contemporary experience of middle-income countries, with a focus on China, we argue that alternatives to the rule of law state, including interpersonal trust, closed networks and authoritarian political control, can only achieve limited scale and scope effects, and are prone to high deadweight costs arising from corruption and the capture of the public sphere by private interests. We also discuss the potential of transplants of legal rules and institutions to catalyse the transition to impersonal trade based on the rule of law, and present evidence, from time-series econometric analysis, that the diffusion of shareholder protection laws has the potential to support financial development in emerging markets. Evolution towards the rule of law state is, we conclude, one possible developmental path for middle-income countries.

Energy-Saving Household Behavior as an Object of Research and Projects

2020 ◽  
Vol 9 (3) ◽  
pp. 16-22
Author(s):  
Rais Burganov ◽  
Liliya Urazbahtina
Keyword(s):  
Economic Theory ◽  
Energy Conservation ◽  
Energy Saving ◽  
Household Behavior ◽  
Point Of View ◽  
Theoretical Approaches ◽  
Current State ◽  
Irrational Behavior ◽  
Technological Concepts ◽  
Saving Behavior

The energy-saving behavior of households has a huge and obvious role in the development of the economy and society. However, the theoretical approaches of economists on this topic are developing more slowly than its applied aspects. The aim of this work is to consider the energy-saving behavior of households from the angle of the main directions of economic theory. The research methodology is based on the principles of the implementation of areas of economic theory, as well as on the use of total energy, consisting of electric, thermal, solar, mechanical and other types of energy. The article proposes a classification of factors (main and secondary, main and auxiliary) that affect household behavior in the field of energy conservation and which should be taken into account when drawing up its mono and polyparametric mathematical models. Moreover, each variable can be positively or negatively reflected in the rational or irrational behavior of households in energy conservation. The paper gives the results of the consideration of problems in shaping the behavior of households from the point of view of the neoclassical direction of economic theory and institutionalism, as well as on the basis of its moral-educational and technological concepts. The current state of introducing the development of energy-saving and nature-friendly technologies into the everyday activities of households will transform the behavior of households in the field of consumption of any type of energy.

scholarly journals The Impact of Rice Import Policy on Community Economic Welfare in East Java

2022 ◽  
Vol 05 (01) ◽  
Author(s):  
Sri Widayanti ◽  
Keyword(s):  
Secondary Data ◽  
Simultaneous Equation ◽  
Point Of View ◽  
Economic Welfare ◽  
Economic Surplus ◽  
Production And Consumption ◽  
Distribution Point ◽  
The Government ◽  
Welfare Changes ◽  
The Impact

This study aims to identify policies, levels of imports, production and consumption in East Java, to analyze the impact of rice import tariff policies on production and consumption and also the community welfare changes in East Java. The data that used in this study are secondary data from the Central Statistics Agency (BPS), BULOG, and other research. The method of analysis uses the 2SLS simultaneous equation and the economic surplus simulation. The results showed that from 2004 to 2018, East Java always had a higher rice production rate than the consumption, but still continued to do rice import to maintain price stabilization. The simulation of a tariff increase causes an increase in production and a decrease in consumption, and vice versa. Liberalization of the rice trade (tariff exemption) has led to greater economic welfare, but from a distribution point of view, producers receive a smaller surplus than consumers, which means that the benefit distribution aspect of government policies is not realized, so the government must pay more attention to producer surpluses and consumer surpluses without much disadvantage one of the parties.

scholarly journals Recognizing Reality—Unification of Official and Parallel Market Exchange Rates

2021 ◽  
Vol 20 (25) ◽  
Author(s):  
Simon Gray
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Case Studies ◽  
Economic Activity ◽  
Central Banks ◽  
Market Exchange ◽  
Market Clearing ◽  
Economic Agents ◽  
Market Exchange Rate ◽  
Clearing Rate

Some central banks have maintained overvalued official exchange rates, while unable to ensure that supply of foreign exchange meets legitimate demand for current account transactions at that price. A parallel exchange rate market develops, in such circumstances; and when the spread between the official and parallel rates is both substantial and sustained, price levels in the economy typically reflect the parallel market exchange rate. “Recognizing reality” by allowing economic agents to use a market clearing rate benefits economic activity without necessarily leading to more inflation. But a unified, market-clearing exchange rate will not stabilize without a supportive fiscal and monetary context. A number of country case studies are included; my thanks to Jie Ren for pulling together all the data for the country case studies, and the production of the charts.

Economics: The Last Bastion of Rationality

2011 ◽  
Author(s):  
Gilles Saint-Paul
Keyword(s):  
Economic Theory ◽  
Point Of View ◽  
Competitive Markets ◽  
Free Markets ◽  
Global Efficiency ◽  
Laissez Faire ◽  
Theory Lead

This chapter examines how the assumptions underlying economic theory lead to a presumption of laissez-faire, and why this apparatus is fragile because those assumptions are not grounded on empirical observations but on methodological requirements instead. Many people traditionally think of economists as advocates of laissez-faire, that is, letting the free operation of markets determine how resources are allocated throughout society. This presumption comes from some central results of economic theory which predict that, in some sense, free markets lead to desirable outcomes from the point of view of global efficiency. Essentially, these results come from two observations. First, competitive markets allow all voluntary transactions to take place. Second, all voluntary transactions are mutually advantageous and therefore increase the welfare of both parties.

Behavioral Economics

2020 ◽  
pp. 281-298
Author(s):  
Miloš Krstić ◽  
Nebojša Pavlović
Keyword(s):  
Economic Theory ◽  
Social Behavior ◽  
Behavioral Economics ◽  
Human Behavior ◽  
Psychological Research ◽  
Point Of View ◽  
Psychological Dimension ◽  
The Social ◽  
Ancient Times ◽  
State Interference

The idea of the significance of the psychological dimension of human behavior is not new and has existed in the social sciences since ancient times. Accordingly, there is an endeavor to place economic analysis on the foundations of psychological research, which takes its form of expression in economic theory through the affirmation of behavioral economics. The aim of this chapter is to critically analyze various normative research programs in behavioral economics and to consider the importance of alternative concepts, models, and theories from the point of view of improving understanding of real economic and social behavior. The particular value of this chapter lies in affirming the importance of a program of behavioral economics known as new paternalism, which is based on challenging the concept of maximizing rationality and opens a new dimension of understanding the justification of state interference in the sphere of economy and society.

Institutional Economics

2020 ◽  
pp. 185-200
Author(s):  
Zehra Doğan Çalışkan
Keyword(s):  
Economic Theory ◽  
19Th Century ◽  
Economic History ◽  
Institutional Economics ◽  
Point Of View ◽  
Inductive Method ◽  
Economic Theories ◽  
Historical School ◽  
Classical Economics ◽  
New Perspective

Since the mid-19th century, the thinkers of historical school challenged the deductive, abstractive, and decisive methods of neo-classical economics. According to historical school, social terms have been changed within space and time. Therefore, they defended that the economic theories could not be universal but could only be relative. Instead of professing laws with universal validity, it is more important to reveal the changing structure of society with the extensive studies of economic history. The inductive method of German historical school brought a new perspective into economic theory with theorems such as to consider society as an organism beyond the individuals who would only seek their benefits and the necessity of historical followings in the economic events. From this point of view, it is possible to observe the traces of historical school in the old institutional economics literature.

How Many Paradigms There are in Economic Theory – and Can it Become a One-paradigm Science

2021 ◽  
pp. 129
Author(s):  
Dmitrij Egorov
Keyword(s):  
Economic Theory ◽  
Point Of View ◽  
Economic Science ◽  
Individual Choice ◽  
Equilibrium System ◽  
The Past ◽  
Scientific Disciplines ◽  
Modern Economic ◽  
Development Of Economic Theory ◽  
Science Subject

Over the past 100 years, economics has stood out from other scientific disciplines because of the presence of two fundamentally different approaches to understanding its subject: from a systemic point of view, and from the point of view of individual choice. All the main directions of modern economic theory turn out to be reducible to two paradigms, conceptually related to two main interpretations of the economic science subject. The understanding of the economy as an equilibrium or non-equilibrium system is associated with two said paradigms. The author believes that the development of economic theory after Keynes can be interpreted as a series of attempts to integrate the identified paradigms. In another form, this is the question of the synthesis of micro- and macro-approaches in economic theory. 

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