General equilibrium models with rationing: The making of a ‘European specialty’

Unlike the U.S., Europe was a hotbed for general-equilibrium models with rationing (GEMR). Our goal is to explain how and why GEMR became a “European specialty” (Portes, 1987: p. 1332). We show how research on GEMR took off and developed in France and Belgium from the mid-1970s, before expanding all around Europe. We also argue that three main factors enabled the deployment of GEMR in Europe over the 1970s and 1980s. First, GEMR opened up research opportunities in areas in which European economists had specific interests (e.g., general equilibrium theory). Second, GEMR benefited from the support of some leading academic figures who mobilized institutional resources to keep stimulating research over years (e.g., Jacques Drèze, at the Center for Operations Research and Econometrics). Third, there were problems specific to the Old Continent that stimulated research on GEMR, namely persistent unemployment in Western Europe and planning in Eastern Europe.