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Intertemporal competitive equilibrium: a reappraisal of a basic source of instability

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  • Sergio, Parrinello

Abstract

This paper resumes a source of instability of intertemporal equilibrium which was anticipated by Garegnani (2003) and criticized by Schefold (2004). The author points out that a non orthodox tâtonnement pricing must be accepted if the theory has to be consistent with the Jevons’s law of unique price. Such tâtonnement prescribes that the rule for adjusting the relative prices of commodities available at different times is different from the rule applied to the relative prices of contemporary commodities. The working of such a mechanism can be a fundamental source of instability of the intertemporal equilibria. This result seems to be a challenge for the stability of general equilibrium also in the context of more realistic nontâtonnement disequilibrium processes. Final version of this working paper: S.Parrinello, “Intertemporal Competitive Equilibrium, Capital and the Stability of Tâtonnement Pricing Revisited”, Metroeconomica 56:4 (2005). Further development: S. Parrinello, Numeraire, Savings and the Instability of a Competitive Equilibrium”, Metroeconomica 62:2 (2011) 328–355.

Suggested Citation

  • Sergio, Parrinello, 2004. "Intertemporal competitive equilibrium: a reappraisal of a basic source of instability," MPRA Paper 30823, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30823
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    File URL: https://mpra.ub.uni-muenchen.de/30823/1/MPRA_paper_30823.pdf
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    References listed on IDEAS

    as
    1. Bertram Schefold, 2008. "Savings, Investment and Capital in a System of General Intertemporal Equilibrium — an Extended Comment on Garegnani with a Note on Parrinello," Palgrave Macmillan Books, in: Guglielmo Chiodi & Leonardo Ditta (ed.), Sraffa or An Alternative Economics, chapter 6, pages 127-186, Palgrave Macmillan.
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    More about this item

    Keywords

    Intertemporal equilibrium; instability; savings; capital;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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