Book contents
- Frontmatter
- Contents
- List of figures
- Preface
- Acknowledgments
- Introduction
- Part I The models of the mature phase
- 1 Walras's conception of a competitive market economy
- 2 The mature models: Not a normative scheme
- 3 The mature models of the barter of stocks of commodities
- 4 Institutions and participants in the model of monetary oral pledges markets
- 5 Disequilibrium and equilibrium in the model of monetary oral pledges markets
- 6 The structure of the mature nondurable consumer commodities model
- 7 The equilibrating processes in the mature nondurable consumer commodities model
- 8 The structure of the mature comprehensive model
- 9 The equilibrating processes in the mature comprehensive model
- 10 Walras and his critics on the maximum utility of new capital goods
- 11 The mature models of the money market
- 12 Iteration in the mature model of tatonnement
- 13 The mature model of the behavior of the entrepreneur
- 14 Walras versus Edgeworth on tatonnement processes
- Part II The models of the phase of decline
- References
- Collation of editions of the Eléments
- Index
12 - Iteration in the mature model of tatonnement
Published online by Cambridge University Press: 05 May 2010
- Frontmatter
- Contents
- List of figures
- Preface
- Acknowledgments
- Introduction
- Part I The models of the mature phase
- 1 Walras's conception of a competitive market economy
- 2 The mature models: Not a normative scheme
- 3 The mature models of the barter of stocks of commodities
- 4 Institutions and participants in the model of monetary oral pledges markets
- 5 Disequilibrium and equilibrium in the model of monetary oral pledges markets
- 6 The structure of the mature nondurable consumer commodities model
- 7 The equilibrating processes in the mature nondurable consumer commodities model
- 8 The structure of the mature comprehensive model
- 9 The equilibrating processes in the mature comprehensive model
- 10 Walras and his critics on the maximum utility of new capital goods
- 11 The mature models of the money market
- 12 Iteration in the mature model of tatonnement
- 13 The mature model of the behavior of the entrepreneur
- 14 Walras versus Edgeworth on tatonnement processes
- Part II The models of the phase of decline
- References
- Collation of editions of the Eléments
- Index
Summary
Some writers have contended that Walras did not have a theory of economic tatonnement but was instead exclusively concerned with a technique of mathematical iteration for the purpose of finding the solutions to the equations of his model of general equilibrium, that his models lack an account of a means whereby prices are changed, and that he was uninterested in real economic adjustment processes. These allegations are examined, and it is concluded they are incorrect. It is shown that Walras wanted to develop a realistic model of time-consuming economic adjustment processes in a freely competitive economy, and that he incorporated into it the processes of iterative pricing, of iterative entrepreneurial behavior, and of a presumed convergence of the variables to equilibrium.
Introduction
This and the following two chapters fill in the details of Walras's conception of the dynamics of a freely competitive market model. Walras gave many accounts of markets undergoing repeated price adjustments that bring them progressively closer to equilibrium. It has been asserted by some writers that in all these accounts he was not really discussing the behavior of markets at all but was instead trying to design a mathematical technique of iteration to find the solutions to his equations of general equilibrium. For example, after quoting a passage in which Walras wrote that the market moves toward equilibrium through the raising and lowering of prices, Richard M. Goodwin asserted that Walras stated that “the use of this kind of market adjustment … is only a mathematical method of solution and not the practical one exemplified in the behavior of real markets” (Goodwin 1951, p. 5).
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- Walras's Market Models , pp. 256 - 278Publisher: Cambridge University PressPrint publication year: 1996