On the number of critical equilibria separating two equilibria
AbstractIt is shown that two arbitrary equilibria in the general equilibrium model without sign restrictions on endowments can be joined by a continuous equilibrium path that contains at most two critical equilibria. This property is strengthened by showing that regular equilibria having an index equal to one, a necessary condition for stability, can be joined by a path containing no critical equilibrium. These properties follow from the real-algebraic nature of the set of critical equilibria in any fiber of the equilibrium manifold.
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Bibliographic InfoArticle provided by Econometric Society in its journal Theoretical Economics.
Volume (Year): 7 (2012)
Issue (Month): 1 (January)
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Web page: http://econtheory.org
Equilibrium prices; equilibrium manifold; equilibrium path; critical equilibrium; catastrophe;
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