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Perfect competition

In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or ato

Walras's law

Walras's law is a principle in general equilibrium theory asserting that budget constraints imply that the values of excess demand (or, conversely, excess market supplies) must sum to zero regardless

Fundamental theorems of welfare economics

There are two fundamental theorems of welfare economics. The first states that in economic equilibrium, a set of complete markets, with complete information, and in perfect competition, will be Pareto

Dynamic stochastic general equilibrium

Dynamic stochastic general equilibrium modeling (abbreviated as DSGE, or DGE, or sometimes SDGE) is a macroeconomic method which is often employed by monetary and fiscal authorities for policy analysi

Quantity adjustment

In economics, quantity adjustment is the process by which a market surplus leads to a cut-back in the quantity supplied or a market shortage causes an increase in supplied quantity. It is one possible

Sonnenschein–Mantel–Debreu theorem

The Sonnenschein–Mantel–Debreu theorem is an important result in general equilibrium economics, proved by Gérard Debreu, , and Hugo F. Sonnenschein in the 1970s. It states that the excess demand curve

Wicksellian Differential

The Wicksellian Differential is derived from Knut Wicksell's theory of interest and is an approximation of the extent of disequilibrium in an economy. Formula: Wicksellian Differential = Natural Rate

Convexity in economics

Convexity is an important topic in economics. In the Arrow–Debreu model of general economic equilibrium, agents have convex budget sets and convex preferences: At equilibrium prices, the budget hyperp

General disequilibrium

In macroeconomic theory, general disequilibrium is a situation in which some or all of the aggregated markets, such as the money market, the goods market, and the labor market, fail to clear because o

Arrow–Debreu model

In mathematical economics, the Arrow–Debreu model suggests that under certain economic assumptions (convex preferences, perfect competition, and demand independence) there must be a set of prices such

General equilibrium theory

In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the intera

Numéraire

The numéraire (or numeraire) is a basic standard by which value is computed. In mathematical economics it is a tradable economic entity in terms of whose price the relative prices of all other tradabl

Abstract economy

In theoretical economics, an abstract economy (also called a generalized N-person game) is a model that generalizes both the standard model of an exchange economy in microeconomics, and the standard m

Computable general equilibrium

Computable general equilibrium (CGE) models are a class of economic models that use actual economic data to estimate how an economy might react to changes in policy, technology or other external facto

Shapley–Folkman lemma

The Shapley–Folkman lemma is a result in convex geometry with applications in mathematical economics that describes the Minkowski addition of sets in a vector space. Minkowski addition is defined as t

Radner equilibrium

Radner equilibrium is an economic concept defined by economist Roy Radner in the context of general equilibrium. The concept is an extension of the Arrow–Debreu equilibrium and the base for the first

IS–LM model

IS–LM model, or Hicks–Hansen model, is a two-dimensional macroeconomic tool that shows the relationship between interest rates and assets market (also known as real output in goods and services market

Non-convexity (economics)

In economics, non-convexity refers to violations of the convexity assumptions of elementary economics. Basic economics textbooks concentrate on consumers with convex preferences (that do not prefer ex

Partial equilibrium

In economics, partial equilibrium is a condition of economic equilibrium which analyzes only a single market, ceteris paribus (everything else remaining constant) except for the one change at a time b

Kakutani fixed-point theorem

In mathematical analysis, the Kakutani fixed-point theorem is a fixed-point theorem for set-valued functions. It provides sufficient conditions for a set-valued function defined on a convex, compact s

Hahn's problem

Hahn's problem (or Hahn's question) refers to the theoretical challenge of building general equilibrium models where money does not enter preferences, yet has a positive equilibrium value. Money, sinc

Temporary equilibrium method

The temporary equilibrium method has been devised by Alfred Marshall for analyzing economic systems that comprise interdependent variables of different speed. Sometimes it is referred to as the moving

Applied general equilibrium

In mathematical economics, applied general equilibrium (AGE) models were pioneered by Herbert Scarf at Yale University in 1967, in two papers, and a follow-up book with Terje Hansen in 1973, with the

Gempack

GEMPACK (General Equilibrium Modelling PACKage) is a modeling system for CGE economic models, used at the Centre of Policy Studies (CoPS) in Melbourne, Australia, and sold to other CGE modellers. Some

Edgeworth conjecture

In economics, the Edgeworth conjecture is the idea, named after Francis Ysidro Edgeworth, that the core of an economy shrinks to the set of Walrasian equilibria as the number of agents increases to in

Local nonsatiation

The property of local nonsatiation of consumer preferences states that for any bundle of goods there is always another bundle of goods arbitrarily close that is strictly preferred to it. Formally, if

Walrasian auction

A Walrasian auction, introduced by Léon Walras, is a type of simultaneous auction where each agent calculates its demand for the good at every possible price and submits this to an auctioneer. The pri

Fisher market

Fisher market is an economic model attributed to Irving Fisher. It has the following ingredients:
* A set of divisible products with pre-specified supplies (usually normalized such that the supply of

Regular economy

A regular economy is an economy characterized by an excess demand function which has the property that its slope at any equilibrium price vector is non-zero. In other words, if we graph the excess dem

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