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Comparative Statics and Welfare Theorems When Goods Are Normal

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  • John Quah

    () (St Hugh's College, Oxford)

Abstract

We examine the impact of the normality assumption, together with the weak axiom, in three related areas of general equilibrium theory. Most obviously, these properties have important implications for equilibrium comparative statics, in the context of exchange, production or (incomplete) financial economies. They also shed light on the relationship between comparative statics and the structure of the excess demand function, which could be thought of as an aspect of the correspondence principle (Samuelson (1947)). Lastly, these properties permit the construction of welfare-like theorems which do not rely on the classical assumptions of individual rationality.

Suggested Citation

  • John Quah, 2001. "Comparative Statics and Welfare Theorems When Goods Are Normal," Economics Papers 2001-W24, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:0124
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    File URL: http://www.nuff.ox.ac.uk/Economics/papers/2001/w24/hlp6.pdf
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    References listed on IDEAS

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    3. Gwyn Aneuryn-Evans & Angus Deaton, 1980. "Testing Linear versus Logarithmic Regression Models," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 275-291.
    4. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    5. Russell Davidson & James G. MacKinnon, 1985. "Testing Linear and Loglinear Regressions against Box-Cox Alternatives," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 499-517, August.
    6. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
    7. Clive W. J. Granger & Jeffrey J. Hallman, 1988. "The algebra of I (1)," Finance and Economics Discussion Series 45, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Quah, John K. -H., 2003. "Market demand and comparative statics when goods are normal," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 317-333, June.

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