Constructing Pure-Exchange Economies with Many Equilibria

Pascal Gauthier, Timothy Kehoe and Erwan Quintin ()
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Pascal Gauthier: https://www.nib.int/contacts/staff

No 631, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We develop a restart algorithm based on Scarf’s (1973) algorithm for computing approximate Brouwer fixed points. We use the algorithm to compute all of the equilibria of a general equilibrium pure-exchange model with four consumers, four goods, and 15 equilibria. The mathematical result that motivates the algorithm is a fixed-point index theorem that provides a sufficient condition for uniqueness of equilibrium and a necessary condition for multiplicity of equilibria. Examining the structure of the model with 15 equilibria provides us with a method for constructing higher dimensional models with even more equilibria. For example, using our method, we can construct a pure-exchange economy with eight consumers and eight goods that has (at least) 255 equilibria.

Keywords: Uniqueness of equilibrium; Multiplicity of equilibrium; Computation of equilibrium (search for similar items in EconPapers)
JEL-codes: C60 C62 C63 D51 (search for similar items in EconPapers)
Date: 2021-12-13
New Economics Papers: this item is included in nep-cwa and nep-his
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https://www.minneapolisfed.org/research/sr/sr631.pdf

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Journal Article: Constructing pure-exchange economies with many equilibria (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:93490

DOI: 10.21034/sr.631

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