Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets
AbstractThis paper studies the extent to which qualitative features of Walrasian equilibria are refutable given a finite data set. In particular, we consider the hypothesis that the observed data are Walrasian equilibria in which each price vector is locally stable under tï¿½tonnement. Our main result shows that a finite set of observations of prices, individual incomes and aggregate consumption vectors is rationalizable in an economy with smooth characteristics if and only if it is rationalizable in an economy in which each observed price vector is locally unique and stable under tï¿½tonnement. Moreover, the equilibrium correspondence is locally monotone in a neighborhood of each observed equilibrium in these economies. Thus the hypotheses that equilibria are locally stable under tï¿½tonnement, equilibrium prices are locally unique and equilibrium comparative statics are locally monotone are not refutable with a finite data set.
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Bibliographic InfoArticle provided by Econometric Society in its journal Econometrica.
Volume (Year): 68 (2000)
Issue (Month): 6 (November)
Other versions of this item:
- Donald J. Brown & Chris Shannon, 1998. "Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets," Cowles Foundation Discussion Papers 1170, Cowles Foundation for Research in Economics, Yale University.
- Donald J. Brown & Chris Shannon, 1998. "Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets," GE, Growth, Math methods 9802003, EconWPA, revised 02 Mar 1998.
- Donald J. Brown and Chris Shannon., 1997. "Uniqueness, Stability, and Comparative Statics in Rationalizable Walrasian Markets," Economics Working Papers 97-256, University of California at Berkeley.
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
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