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Three Lectures on the Walrasian Hypotheses for Exchange Economies

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  • Donald J. Brown

    (Department of Economics, Yale University)

Abstract

This paper discusses the testable implications of the Walrasian hypotheses: H1 Observed market demand is the sum of consumer's demands derived from utility maximization subject to budget constraints. H2 There exists an observable (locally) unique equilibrium price system such that the observable market demand is equal to the observable market supply in every market. H3 The observed equilibrium price system is a (locally) stable equilibrium of tƒtonnement price adjustment. The main results are the Brown Matzkin Theorem: H1 is testable, and the Brown Shannon Theorem: H2 and H3 are not testable.

Suggested Citation

  • Donald J. Brown, 1997. "Three Lectures on the Walrasian Hypotheses for Exchange Economies," Working Papers 782, Economic Growth Center, Yale University.
    • Handle: RePEc:egc:wpaper:782
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    File URL: http://www.econ.yale.edu/growth_pdf/cdp782.pdf
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    References listed on IDEAS

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    1. Mas-Colell, Andreu, 1977. "On the equilibrium price set of an exchange economy," Journal of Mathematical Economics, Elsevier, vol. 4(2), pages 117-126, August.
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    Keywords

    Exchange Economies; Testable Restrictions;

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