On treatment of interests, profits and equilibrium non-existence in general equilibrium models

William Icefield

MPRA Paper from University Library of Munich, Germany

Abstract: It is sometimes argued that one cannot criticize general equilibrium models on grounds of equilibrium non-existence. I argue that once problematic treatments of interests and profits in general equilibrium models are corrected, equilibrium non-existence issues arise again. Uniform rate of interest and zero economic profit of firms must hold after corrections, which allow equilibrium existence for only restricted circumstances. This demonstrates ongoing relevance of the Cambridge capital controversies.

Keywords: Cambridge capital controversies; general equilibrium; uniform rate of interest; zero economic profit; equilibrium existence (search for similar items in EconPapers)
JEL-codes: B22 D50 E12 E13 (search for similar items in EconPapers)
Date: 2020-01-22
New Economics Papers: this item is included in nep-hpe and nep-mac
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