## general equilibrium

From The New Palgrave Dictionary of Economics, Second Edition, 2008

Edited by
Steven
N.
Durlauf
and
Lawrence
E.
Blume

Alternate versions available:
1987 Edition

Back to top

Back to top
### 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.

### Keywords

Arrow, K.; Arrow–Debreu model; competitive equilibrium; convexity; Cournot, A.; Debreu, G.; equilibrium of production; equilibrium over time; existence of general equilibrium; general equilibrium; Hicks, J.; Jevons, W.; Marshall, A.; Menger, C.; Mill, J. S.; monetary equilibrium; overlapping generations model of general equilibrium; Pareto efficiency; Pareto, V.; partial equilibrium; Poinsot, L.; rational expectations; Samuelson, P.; Smith, A.; temporary equilibrium; von Neumann's Law; Wald's Law; Walras, L.; Walras's Law; Walras's theory of investment

Back to top

Back to top
### See Also

### 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. 18 January 2017 <http://www.dictionaryofeconomics.com/article?id=pde2008_G000023> doi:10.1057/9780230226203.0623