What is Walras s General Equilibrium Analysis?

As early as 1874, the French economist Leon Walras established a set of theories known as Walras general equilibrium. In the history of economic theory, Walras was the first to propose a mathematical model of general equilibrium and try to solve the problem of the existence of general equilibrium. Walras constructs his own system of general equilibrium theory step by step from simple to complex.

First of all, he examines the general equilibrium of exchange from the perspective of the product market, then examines the general equilibrium including the production process from the perspective of the factor market, and then conducts a general equilibrium analysis of capital accumulation. Walras's theory of general equilibrium was later refined and developed by economists such as Pareto, Hicks, Sherman, Samuelson, Arrow, Debreu, and Mackenzie, and became the modern theory of general equilibrium.

To put it in layman's terms, there are multiple commodities in an economy, and they have their own equilibrium**. For example, if there are commodities A and B, then there are two equations. Demand for a supply of a and demand for b supply of b In fact, for the economy as a whole, the total demand (measured in monetary terms) must be equal to the total supply.

This constraint changes the number of equations from two to one, i.e. if you know the equilibrium position of a, you will know the equilibrium of b. Similarly, if there are n commodities, the number of the equation is n 1.

In fact, there is some complicated math involved, such as how to solve this system of equations. Designed goods are not necessarily simple goods, but can also make money, national debt, and so on. For more in-depth content, you can go to the more advanced books, but Walras's starting point is roughly the one described above.

Walrasian equilibrium means. （）

a.All markets are in balance between supply and demand.

b.The distribution of income is equitable.

c.Consumers get what they want.

d.The total surplus of the sum of society is the largest.

Correct Answer: a

11 Starting from an initial endowment in the Edgeworth box cleverly imaginary excite, if the freely traded contract reached through bargaining satisfies the requirements of Pareto optimality, then the exchange contract can be located anywhere in the contract curve. (filial piety socks).

a.That's right. b.Mistake.

Correct answer: B

What the Marshall system and the Walrasian system have in common is that both are systems of equilibrium theory in Western economics. The difference is that the Marshall system is a representative of local equilibrium, and the Walrasian system is a representative of general equilibrium.

The Marshall system, or partial equilibrium analysis, studies individual product or factor markets by "taking" a market under consideration from the interconnected totalities of markets that make up the entire economic system. In this kind of study, the demand and supply of the commodity in the market are only regarded as a function of its own **, and the ** of other commodities is assumed to be constant, and the level of these constants only affects the position of the supply and demand curve of the commodity under study; The conclusion is that the demand and supply curves of this market together determine the equilibrium** and the number of equilibrium in the market.

The Walras system, i.e., the general equilibrium analysis, holds that in general equilibrium, the supply and demand of any one commodity actually depend not only on the level of the commodity itself, but also on the level of many other goods. Therefore, the supply and demand of each commodity can be seen as a function of all **, the so-called ** system.

Walras proposed a mathematical model of general equilibrium and tried to solve the existential problem of general equilibrium. In addition, Walras explores the uniqueness, stability, and optimality of general equilibrium. Walras's general equilibrium system is built step by step along a line from simple to complex.

He begins by concentrating on the general equilibrium of exchange, without considering the complex factors of production, capital accumulation, and money circulation. After solving the general equilibrium of exchange, the general equilibrium of production and exchange is discussed by adding some more realistic assumptions that commodities are produced. Then, the general equilibrium of capital accumulation or the general equilibrium of the theory of money and circulation is proposed, thus extending the general equilibrium theory from the physical economy to the monetary economy.

According to Walras, as a mechanism to regulate the balance of the market, its changes will lead people to adjust their own production or consumption behavior, so that the economy is in a balanced and stable state. It is a kind of quantitative equilibrium theory, which determines the quantity of supply and demand.

Marshall transforms the object, adjusting the ** of the Walras self-change to the quantity. In fact, with ** as the independent variable, the relationship between things and things connected by ** (utility) is studied. The self-change is changed, and the relationship between things and things is changed to the interpersonal relationship connected by quantity (production cost).

Walras's general equilibrium theory and research methods have an extremely important influence on the history of Western economic thought. He took how to obtain the maximum utility or maximum satisfaction of economic man as the object of economic research, limited the scope of theoretical economic research to the field of rational use or optimal allocation of resources, emphasized consumption, utility and demand, transformed economics into a theoretical system with consumption, exchange, production and distribution as the order, and used the marginal principle to demonstrate the laws that economic man should follow, so as to hail together with Jevons of Britain and Menger of Austria, and jointly launched the marginal revolution of economics in the 70s of the 19th century. His general equilibrium analysis, including local equilibrium analysis, created a precedent for modern economic equilibrium analysis. He strongly advocated the use of mathematical methods to study economic theories, and became the founder of the school of mathematics and mathematical economics on a par with Jevons and others.

In a perfectly competitive market system, the sum of excess demand for all goods in the market is zero at any ** level.

Generation: The Lausanne School is a school of thought in the modern West that is based on economic marginal utility. In the 70s of the 19th century, it appeared at the University of Lausanne, Switzerland.

It is represented by the French economist Walras and the Italian economist Pareto.

The main characteristic of the school is the general equilibrium theory.

where indicates the excessive demand for the i commodity, and pi denotes the ** of the i commodity. If n markets (e.g., markets for n items) are excessive.

If the sum of the demands is positive, then, in the (n+1) market (e.g., the currency market.

The excess supply is equal in value to the sum of the excess demand in the top n markets: (2).

Or, since the currency is 1, the formula becomes: (3).

Assuming that the (n+1) market is a money market, the excess demand for money is equal to the sum of the nominal excess supply in all other markets, according to Walras's theorem.

The non-equilibrium is relative to the Walrasian equilibrium, and the non-equilibrium is the non-Walrasian equilibrium.

Leon Walras's general equilibrium analysis, including local equilibrium analysis, created a precedent for modern economic equilibrium analysis. He strongly advocated the use of mathematical methods to study economic theories, and became the founder of the mathematical school and mathematical economics on a par with Jevons and others.