General Equilibrium with Regenerative Capital: Extending DSGE Models for Institutional Value Creation

Roshan Ghadamian
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Roshan Ghadamian: Institute for Regenerative Systems Architecture

IRSA Working Papers from Institute for Regenerative Systems Architecture

Abstract: Arrow--Debreu equilibrium rests on preconditions that fragility-dominated domains do not satisfy: budget constraints become dynamic fragility constraints, prices cannot coordinate behaviour when capital cycles collapse, and the welfare theorems lose their footing. This paper asks what an equilibrium concept looks like when capital is allocated rather than traded — when it is governed by cadence rules and alignment conditions instead of by a price vector. We define a regenerative equilibrium as a fixed point in which allocation rules, cadence rules and capability dynamics are mutually consistent, prove existence by a fixed-point argument, and establish two welfare results: any regenerative equilibrium is Pareto-efficient within the alignment-feasible set, and any alignment-feasible efficient allocation is decentralisable by a cycle constitution. A third result states the conditions under which regenerative equilibria are welfare-superior to extractive ones in fragility-dominated domains. The paper is explicit about the scope of the agent set over which these results quantify, which determines what they can and cannot be taken to show.

Keywords: general equilibrium; regenerative capital; welfare theorems; fixed point; cycle constitution; fragility-dominated domains (search for similar items in EconPapers)
JEL-codes: D50 D61 E22 H41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:evk:wpaper:gerc

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