On Stability in a Complex Economy,
Abstract
In this paper we examine the local stability of a competitive equilibrium for a class of economies where strength of interaction among markets is explicitly parameterized. Within this class we establish necessary and sufficient conditions for an equilibrium to be locally stable in terms of the number of markets, the ratio of active links among markets to those combinatorially possible, and the average strength of an active link. In the Discussion we relate our result to the more standard sufficient conditions of weak gross substitutability over commodity pairs and negative diagonal dominance within the Jacobian of aggregate excess demands. Finally, we touch briefly upon the possibility that even a crude hierarchical organization of the markets may favorably alter the probability of stable equilibria. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1980
- Accession Number
- ADA095440
Entities
People
- P. J. E. Stan
Organizations
- RAND Corporation