Premium
On the value of small‐scale GE models
Author(s) -
Jones Ronald W.
Publication year - 2015
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12058
Subject(s) - economics , comparative statics , general equilibrium theory , mathematical economics , value (mathematics) , comparative advantage , production (economics) , scale (ratio) , stability (learning theory) , order (exchange) , econometrics , microeconomics , neoclassical economics , mathematics , computer science , physics , statistics , quantum mechanics , machine learning , finance
Abstract The field of international economics has made frequent use of general equilibrium models in order to investigate the nature of those possible comparative static equilibrium solutions that seem somewhat paradoxical. Frequently the analysis is done for settings in which the number of commodities, countries, and/or factors of production is assumed to be rather small. For example, the classic Ricardian model making use of the concept of comparative advantage based on comparisons of efficient ratios of country productivities has solutions that hold for any number of countries or commodities. A number of different issues, such as stability conditions and the transfer problem, are discussed in which surprising equilibrium outcomes possible in a general situation can be understood more easily in a small‐scale setting.