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Evenly rotating economy: A new modeling technique for an old equilibrium construct

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  • William Luther

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Abstract

In the middle of the twentieth century, just five years before Arrow and Debreu proved the existence of an equilibrium for a competitive economy in the Walrasian system, Ludwig von Mises introduced the English-speaking world to his alternative equilibrium construct: the evenly rotating economy. In contrast to Arrow and Debreu, which characterizes equilibrium as a unique vector of prices and quantities, Mises depicts equilibrium as a pattern of behavior. After reviewing the Misesian conception of equilibrium and its failure to take hold in the profession, I turn to the modern literature. I contend that the evenly rotating economy is a special case of the now-prevalent class of search-theoretic exchange models. As such, I argue that this class of models is particularly well suited for applications considered by economists working in the Austrian tradition. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • William Luther, 2014. "Evenly rotating economy: A new modeling technique for an old equilibrium construct," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(4), pages 403-417, December.
  • Handle: RePEc:kap:revaec:v:27:y:2014:i:4:p:403-417 DOI: 10.1007/s11138-013-0242-8
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    Cited by:

    1. William Luther, 2016. "Mises and the moderns on the inessentiality of money in equilibrium," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(1), pages 1-13, March.

    More about this item

    Keywords

    Austrian economics; Evenly rotating economy; General equilibrium; Matching; Mises; Search; Walrasian; B53;

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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