D5–General Equilibrium and Disequilibrium

21 July, 2012, Lars P. Syll’s Blog, Why general equilibrium economics is a dead end

As long as we cannot show, except under exceedingly special assumptions, that there are convincing reasons to suppose there are forces which lead economies to equilibria – the value of general equilibrium theory is nil. As long as we can not really demonstrate that there are forces operating – under reasonable, relevant and at least mildly realistic conditions – at moving markets to equilibria, there can not really be any sustainable reason for anyone to pay any interest or attention to this theory. A stability that can only be proved by assuming “Santa Claus” conditions is of no avail.

Full text: http://larspsyll.wordpress.com/2012/07/21/why-general-equilibrium-economics-is-a-dead-end/

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