TYPICAL PROPERTIES OF LARGE RANDOM ECONOMIES WITH LINEAR ACTIVITIES

Andrea de Martino, Matteo Marsili and Isaac Perez Castillo

Macroeconomic Dynamics, 2007, vol. 11, issue S1, 34-61

Abstract: We study the competitive equilibrium of large random economies with linear activities using methods of statistical mechanics. We focus on economies with C commodities, N firms, each running a randomly drawn linear technology, and one consumer. We derive, in the limit N, C ∞ with n=N/C fixed, a complete description of the statistical properties of typical equilibria. We find two regimes, which in the limit of efficient technologies are separated by a phase transition, and argue that endogenous technological change drives the economy close to the critical point.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:11:y:2007:i:s1:p:34-61_06

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