Measurement, Quantification, and Economic Analysis: Numeracy in Economics

By Ingrid H. Rima | Go to book overview

Chapter 21

Simultaneous economic behavior under conditions of ignorance and historical time

Donald W. Katzner

Economists recognized long ago, indeed, at least as far back as Cournot (1960:127), that simultaneity is a fundamental fact of economic life. At present, their most sophisticated expression of this idea is represented, perhaps, by so-called general equilibrium analysis. In its microeconomic form, a fully developed general equilibrium analysis involves the construction of a dynamic mathematical model whose equations characterize, at each moment, the behavior of consumers, the behavior of firms and the operation of markets. (A government may also be included. ) Consumer and firm behaviors emerge from distinct decision-making mechanisms. For each vector of equilibrium and nonequilibrium price values, announced, perhaps, by an auctioneer, the unique solution of the relevant equations of the model at a moment on the model’s time-clock (assuming such a solution exists) represents the result of the simultaneous interaction of the consumers, firms and markets at that moment in light of the endowments and the history of the interactions of previous moments already determined by the model. A sequence of these solutions starting with a fixed initial endowment and generated by changing prices is called a time path. A time path along which there is neither change in economic behavior by any consumer or firm nor change in economic value in any market is an equilibrium path. It is frequently supposed in general equilibrium analysis not only that an equilibrium exists and is (globally) stable, but also that at this equilibrium all markets clear and that trade takes place only after market-clearing equilibrium is achieved. 1 As parameters and other “fixed” elements modify, the equilibrium changes. The presence of fixed-element variation across a succession of given dates thus generates a sequence of equilibria and resulting trades at those dates. Such a model is often referred to as a sequence economy. 2

However, the general equilibrium approach to simultaneity carries with it certain methodological assumptions that severely limit its applicability to real-world phenomena. 3 First, time is “logical” as opposed to historical. It can be restarted over and over again by repeatedly placing the same, fixed dynamic equations at their initial values. Moreover, the equilibrium itself, when it exists, is timeless, that is, the relations that determine the equilibrium

-379-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Measurement, Quantification, and Economic Analysis: Numeracy in Economics
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 462

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.