An adjustment process for an economy with linear production technologies

An adjustment process for an economy with linear production technologies

0.00 Avg rating0 Votes
Article ID: iaor1995588
Country: United States
Volume: 19
Issue: 2
Start Page Number: 341
End Page Number: 351
Publication Date: May 1994
Journal: Mathematics of Operations Research
Authors: , ,
Keywords: adaptive processes
Abstract:

In this paper an adjustment process for a general equilibrium model with linear production technologies is given. The process reaches an equilibrium in the economy by simultaneous adaptations of prices and activity levels. Initially the prices of the commodities in excess demand are relatively increased and the prices of the commodities in excess supply are relatively decreased. First have only a positive activity level when they make zero profit. An important feature of the process is that it keeps track of the location of the starting price vector throughout its operation. Furthermore, the choice of the starting price vector is only limited by economic considerations. Besides, the process converges under rather weak conditions and processes an appealing economic interpretation.

Reviews

Required fields are marked *. Your email address will not be published.