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

Author

Listed:
  • 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.

Suggested Citation

  • Sergio Parrinello, 2002. "Intertemporal competitive equilibrium: a reappraisal of a basic source of instability," Working Papers in Public Economics 67, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp67
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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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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