• Table of Contents
    • Abstract
    • Keywords
    • Article
      • The equilibrium of an exchange economy
      • Equilibrium with production
      • A formal model
      • Two interpretations of the formal model
      • Temporary equilibrium
      • Expectations in temporary equilibrium
      • Money in temporary equilibrium
      • Equilibrium over time
      • Rational expectations
      • An infinite horizon
      • Overlapping generations
      • Limitations of the analysis
      • Properties of general equilibrium
    • See Also
    • Bibliography
    • How to cite this article

general equilibrium

Lionel W. McKenzie
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
Alternate versions available: 1987 Edition
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Abstract

Unlike partial equilibrium theory, general equilibrium theory treats as constant only non-economic influences and embraces all sales and purchases of all agents involved in exchanges. It implies that all subsets of agents are in equilibrium and that all individual agents are in equilibrium. The development of a formal general equilibrium theory in mathematical terms was initiated in the 19th century by Walras, who moved from a model of an exchange economy to an equilibrium with production. It was completed in the 1950s by McKenzie, who formalized Walrasian theory, and by Arrow and Debreu, who formalized Hicksian theory.
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Keywords

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Article

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How to cite this article

McKenzie, Lionel W. "general equilibrium." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 21 September 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_G000023> doi:10.1057/9780230226203.0623

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