A Globally and Universally Stable Price Adjustment Process

Abstract

At least since Walras (1874), economists have been interested in the problem of finding a price adjustment process that generates, for a given economy and an arbitrarily specified starting price system, a path of price systems converging to a price system at which the total excess demand is equal to zero. In Section 3.12 it has been shown that the classical Walrasian tatonnement process may fail to converge if some rather restrictive assumptions on the economy are not satisfied. Therefore, it is interesting to look for alternative price adjustment processes that reach a Walrasian equilibrium price system given any total excess demand function, i.e. any function defined for strictly positive price systems, satisfying homogeneity of degree zero, Walras’ law, continuity, and some boundary behaviour, see Theorems 3.7.1, 3.7.2, and 3.11.1. These conditions are the only properties that may be expected for the total excess demand function of an economy, see Theorem 3.13.1.KeywordsBoundary PointDemand FunctionPrice SystemPrice AdjustmentRelative InteriorThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.