A Contribution to General Equilibrium Theory

Truong Hong Trinh ()
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Truong Hong Trinh: The University of Danang—University of Economics

A chapter in Eurasian Business and Economics Perspectives, 2022, pp 361-375 from Springer

Abstract: Abstract This paper explores the value concept to formulate economic surplus and gross domestic product (GDP) that are the base to define the aggregate demand–aggregate supply (AD–AS) relationship. The structure of the economy is the starting point to define a general equilibrium mechanism that explains the interrelation between the commodity market and resource market. The mechanism of general equilibrium and its adjustment process are defined upon theories of rational expectation, nominal rigidity, and the real business cycle. The research indicates that steady-state equilibrium and steady-state growth rely on the scale and structure of the AD–AS in the markets. From the relationship between general equilibrium and economic growth, the steady-state growth path and inflation-unemployment tradeoff are explained upon changes in the structure of the AD–AS under economic policies (or economic shocks). The paper contributes to the general equilibrium theory that provides a solid microfoundation for further researches on economic growth and economic crisis in the real-world economy.

Keywords: GDP; AD–AS; General equilibrium; Economic growth; Inflation-unemployment (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-030-94036-2_20

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DOI: 10.1007/978-3-030-94036-2_20

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