Full course descriptionGeneral equilibrium theory studies models of an economy organized as a system of competitive markets, in particular the existence of equilibria and their welfare properties. This course gives an introduction to the theory at an advanced level, its conclusions and its limitations. The material is treated rigorously, and a substantial amount of time is spent on mathematical proofs.
Typically, the contents are as follows. First, we study general theorems on welfare and equilibrium existence, starting with an analysis of consumer and producer behavior. Afterwards, we study further important topics such as externalities, (local) uniqueness, core, and the Sonnenschein-Mantel-Debreu Theorem. At the end, we study one topic in more detail, namely the question of whether equilibria of search and matching models converge to a competitive equilibrium when frictions become small.
Course objectivesGet acquainted with advanced general equilibrium theory, with important literature in the field, and with important mathematical proofs.
PrerequisitesKnowledge equivalent to the research master courses “Microeconomics I” (EBC4061) and “Mathematical Research Tools” (EBC4182)
Recommended readingTypically, we use the following literature.
* Debreu, G. (1959): Theory of Value, Yale University Press.
* Mas-Colell A., M.D. Whinston, and J.R. Greene (1995): “Microeconomic Theory”, Oxford University Press.
* Selected papers.