Ami Pro - LN011410

Ami Pro - LN011410 - UCSD Economics 113 Mr. Troy Kravitz...

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Lecture Notes for January 14, 2010 What this course is about: Classic Arrow-Debreu general equilibrium model of the economy. Economic General Equilibrium General Equilibrium Theory : Who was Prof. Debreu and why did he have his own parking space in Berkeley's Central Campus?? Nobel Prizes: Arrow, Debreu June 1993: A birthday party for mathematical general equilibrium theory! October 2005: Mathematical Economics: The Legacy of Gerard Debreu What does mathematical general equilibrium theory do? Tries to put microeconomics on same basis of logical precision as algebra or geometry. Axiomatic method: allows generalization; clearly distinguishes assumptions from conclusions and clarifies the links between them. Two ideas about writing an economic theory: Ockam's razor (KISS - Keep it simple, stupid. ), improves generality Precision, reliable results, Hugo Sonnenschein: "In 1954, referring to the first and second theorems of classical welfare economics, Gerard wrote 'The contents of both Theorems . .. are old beliefs in economics. Arrow and Debreu have recently treated these questions with techniques permitting proofs. ' This statement is precisely correct; once there were beliefs, now there was knowledge. "But more was at stake. Great scholars change the way that we think about the world, and about what and who we are. The Arrow-Debreu model, as communicated in Theory of Value changed basic thinking, and it quickly became the standard model of price theory. It is the 'benchmark' model in Finance, International Trade, Public Finance, Transportation, and even macroeconomics. . .. In rather short order it was no longer 'as it is' in Marshall, Hicks, and Samuelson; rather it became 'as it is' in Theory of Value ." (remarks at the Debreu conference, Berkeley, 2005). Partial and General Economic Equilibrium PARTIAL EQUILIBRIUM UCSD Economics 113 Winter 2010 Mr. Troy Kravitz Prof. R. Starr 1
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S k (p o k ) D k (p o k ), with p o k 0 (or possibly, p o k 0), or p o k = 0 if S k (p o k ) D k (p o k ).
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This note was uploaded on 09/30/2011 for the course ECON 113 taught by Professor Starr,r during the Fall '08 term at UCSD.

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Ami Pro - LN011410 - UCSD Economics 113 Mr. Troy Kravitz...

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