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Closing the invisible hand: a rehabilitation of tâtonnement dynamics

Author

Listed:
  • Donald C. Keenan

    (THEMA University of Cergy-Pontoise)

  • Taewon Kim

    (California State University at Los Angeles)

Abstract

Arguments are made that, for a typical economy, with many goods and consumers, classical tâtonnement dynamics results in a unique, globally stable equilibrium. Since global stability implies uniqueness of equilibrium, these kinds of results complete the positive general equilibrium program classically put forward in favor of the invisible hand. Such stability is demonstrated for economies with consumers having preferences drawn from the CES family, and similar results are reported when the preferences are chosen, instead, to be of the indirect addilog form.

Suggested Citation

  • Donald C. Keenan & Taewon Kim, 2022. "Closing the invisible hand: a rehabilitation of tâtonnement dynamics," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(3), pages 681-711, July.
    • Handle: RePEc:spr:jeicoo:v:17:y:2022:i:3:d:10.1007_s11403-021-00340-7
    DOI: 10.1007/s11403-021-00340-7
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    References listed on IDEAS

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    More about this item

    Keywords

    General equilibrium; Stability; Uniqueness;
    All these keywords.

    JEL classification:

    • 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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