General Equilibrium Theory Historical and Analytical Approaches

Transcription

1 Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftstheorie Prof. Dr. Dres. h.c. Bertram Schefold General Equilibrium Theory Historical and Analytical Approaches Summer term 2017 Students in the Ph.D. and MSQ Programs : Fridays a.m. and 2-4 p.m. in RuW Requirements: Attendance, participation in discussions, term paper or oral exam Contents Aims of the lecture....2 description.2 Outline....3 Literature...4 Schedule of Sessions..7 1

2 Aims of the lecture The module covers the history and actual developments of General Equilibrium Theory (GET). It traces the development of GET from Walras' Éléments d'économie Politique to more recent approaches. The relation of GET and capital theory, as well as Keynesianism will be of special interest. and Exercises provide a profound knowledge in economic theory which is the basis of modern research in Micro- and Macroeconomics. The theoretical foundations presented will enhance and encourage students to develop their own scientific research activities. description General Equilibrium Theory (GET) is still the basis of modern economic theory. The intertemporal GET according to Arrow and Debreu will in this lecture be treated as a reference model, together with an extensive discussion of proofs of existence and of stability properties. The analysis of the equilibrium concept is to be deepened by a reconstruction of its historical evolution, passing from classical economics via the first neo-classical revolution to Walras and to the second neo-classical revolution (which is controversial among historians of economic thought) and to intertemporal theory (Hicks, Lindahl, Hayek). Within this framework, Sraffa and capital theory also are to be treated. This will involve an introduction to the theory of non-negative matrices as a mathematical foundation, the analysis of longperiod prices, the application to the aggregation of capital, the critique of the aggregate production function and a report on my present research on the extent to which the production function may be rescued, using a statistical approach and random matrices. If time permits, it will be shown further how GET was changed under neo-keynesian influence (Malinvaud, Drèze) to include the problem of effective demand. Another path of development leads via the results of the turnpike theorems back to the theory of natural prices. The contrast between the failures (stability) and the successes (existence theorems) of GET from a theoretical and an applied point of view (Keynesians and Monetarists) may stimulate own research. 2

3 Outline 1 Introductory remarks and some mathematical tools a) Long-run prices in GET: an overview b) Fixed point theorems 2 The main pillar of economic theory after 1945: Arrow-Debreu GE a) Assumptions b) Existence c) First applications 3 The modern alternative, classical revival a) Theory of non-negative matrices b) Theory of single production systems c) First applications and the problem of capital theory 4 Walras' "Éléments d'économie Politique", their prehistory and rivals a) Historical introduction b) An overview of the model c) The problem of capital in Walras (Morishima Eatwell debate) (d) Pareto: extensions and restrictions) e) Böhm-Bawerk and Wicksell: Accumulation and interest 5 Dilemmas and new ventures of the interwar period a) The debate on returns to scale and imperfect competition b) Return to the classical notion of the long period c) Viennese contributions: Walras-Wald-model, von Neumann (with an addendum on the theory of linear programming) (d) Hicks and Lindahl: temporary and intertemporal equilibrium) 3

4 6 Keynes and GE (a) Clower and Leijonhufvud) (b) Marshallian interpretation) c) The Malinvaud school d) The critique by Kahn 7 Classical theory: deepening long-period analysis (a) Ricardo and his school on Value and Accumulation) (b) Some models of joint production) c) The surrogate production function d) Statistical approach: is the production function to be rescued on the basis of theory of random matrices? (8 General equilibrium: some more recent developments) (a) Stability and uniqueness of equilibrium) (b) The Hahn Garegnani debate) (9 A critical synthesis) (a) An intertemporal model of general equilibrium with a linear technology) (b) Long period analysis and infinite horizon ('turnpike')) (c) Another reappearance of the problem of capital theory)* * - subjects in brackets were covered only in some semesters and are optional 4

5 Basic Literature Arrow, Kenneth J. and Frank H. Hahn: General Competitive Analysis. Edinburgh: Oliver & Boyd Baloglou, Christos: Die Vertreter der mathematischen Nationalökonomie in Deutschland zwischen 1838 und Marburg: Metropolis Bidard, Christian: Prices, Reproduction, Scarcity. Cambridge: University Press Debreu, Gerard: Theory of Value. An Axiomatic Analysis of General Equilibrium. New York: Wiley Garegnani, Pierangelo: On a Change in the notion of Equilibrium in Recent Work on Value and Distribution: A comment on Samuelson, in: Brown u.a. (Hrsg.): Essays in modern Capital Theory. Amsterdam u.a.: North-Holland Ingrao, Bruna and Giorgio Israel: The Invisible Hand. Cambridge (Mass.): MIT-Press Lancaster, Kelvin: Mathematical Economics. New York: Macmillan Mas-Colell, Andreu u.a.: Microeconomic theory. New York u.a.: Oxford University Press Menger, Karl: Ergebnisse eines mathematischen Kolloquiums, hg. v. F. Dierker und V. Sigmund. Wien: Springer 1998 [ ]. Mirowski, Philip: More Heat Than Light. Economics as Social Physics, Physics as Nature's Economics. Cambridge: University Press 1991 [1989]. Morishima, Michio: Equilibrium, Stability and Growth. A Multisectoral Analysis. Oxford: Clarendon Petri, Fabio: General Equilibrium, Capital and Macroeconomics. A Key to Recent Controversies in Equilibrium Theory. Cheltenham: Elgar Petri, Fabio and Frank Hahn: General Equilibrium Problems and Prospects. London: Routledge Schefold, Bertram: Beiträge zur ökonomischen Dogmengeschichte. Ausgew. und hg. von Volker Caspari. Stuttgart: Schäffer-Poeschel Verlag Schefold, Bertram: Normal Prices, Technical Change and Accumulation. London: Macmillan 1997 (Studies in Political Economy). Schefold, Bertram: Reswitching as a Cause of Instability of Intertemporal Equilibrium, in: Metroeconomica 56(4) 2005, S Schefold, Bertram: Zero wages no problem? A reply to Mandler, in: Metroeconomica 56(4) 2005, S Schefold, Bertram: Savings, Investment and Capital in a System of General Intertemporal Equilibrium a Comment on Garegnani. 4. Version, Jan

6 Schefold, Bertram and Zonghie Han: An Empirical Investigation of Paradoxes (Reswitching and Reverse Capital Deepening) in Capital Theory, in: Cambridge Journal of Economics 30(5) 2006, S Schefold, Bertram: Approximate Surrogate Production Function: Do They Exist, for Large Systems? Contribution to the Round Table Classical Economics and Input-Output Models 16th Conference of the International Input-Output Association (IIOA), Istanbul, 2nd - 6th of July, Schefold, Bertram: Only a few techniques matter! On the number of curves on the wage frontier. To be published in the proceedings of the Sraffa-Conference, Rome 2010: E. S. Levrero, A. Palumbo, A. Stirati: Sraffa and the Reconstruction of Economic Theory, vol. I, Theories of Value and Distribution, Palgrave (Macmillan), forthcoming 2013 Theocharis, Reghinos D.: Early Developments on Mathematical Economics. Second ed. Philadelphia: Porcupine Walker, Donald A.: Walrasian Economics. Cambridge: Cambridge University Press Walras, Léon: Elements of Pure Economics. Transl. By William Jaffé. London: Allan and Unwin Additionally first editions of Böhm-Bawerk, Eugen v.: Positive Theorie des Kapitals, Böhm-Bawerk, Eugen v.: Geschichte und Kritik der Kapitalzins-Theorieen, Fisher, Irving: The Nature of Capital and Income, Fisher, Irving: The Rate of Interest, Hicks, John R.: Value and Capital. An Inquiry into some Fundamental Principles of Economic Theory, Marshall, Alfred: Principles of economics, Pareto, Vilfredo: Manuale di Economia Politica, Wicksell, Knut: Geldzins und Güterpreise, and of Die Skalenertragsdebatte im Economic Journal [ ], 2001, in the series Klassiker der Nationalökonomie, with associated commentary volumes. Düsseldorf: Verlag Wirtschaft und Finanzen. 6

7 Sessions in GET Historical and Analytical Approaches (2 SWS, RuW 4.203) Fr April 21st 2017 Fr April 28th - Fr May 5th - Fr May 12th Fr May 19th - Fr May 6th - Fr June 2nd Fr June 9th - Fr June 16th - Fr June 23rd Fr June 30th (RuW 3.239) (RuW 3.239) Fr July 7th Fr July 14th - Fr July 21st 7