Price Dynamics in General Equilibrium Experiments

  title={Price Dynamics in General Equilibrium Experiments},
  author={Sean M. Crockett},
General equilibrium (GE) theory faces several related challenges. Classical theories of out‐of‐equilibrium adjustment are intuitive but implausibly centralized. Further, standard restrictions on individual preferences place little structure on aggregate excess demand functions. Amongst other issues, this fact implies that economies can be unstable under classical dynamics, and thus instability appears to be an unavoidable feature of GE theory. This paper recounts laboratory studies of GE… CONTINUE READING