Stationary Temporary Equilibrium in a General Model of Optimal Accumulation and Trade
This paper analyzes the movement of market-clearing prices in an intertemporal general equilibrium framework and, in particular, proves the existence of a stationary temporary equilibrium. A model of a competitive economy is developed which consists of several "small" countries engaged in consumption, production and trade. Following Hicks, one way to look at the evolution of an economic system is to view it as a succession of temporary competitive equilibria. The aspect of stationarity is interesting because if the sequence of temporary equilibria converges to a steady-state, it must converge to a stationary temporary equilibrium. A linear-logarithmic economy exhibits convergence.
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