On closure rules: homogeneity and dynamics in applied general equilibrium models

Mathias Dewatripont and Gilles Michel

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: The problem of model 'closure' has been a major focus of the literature on the theoretical aspects of applied general equilibrium models. This paper addresses the issue by focusing on the implicit behavioral assumption leading to the existence of the closure problem. To do this, it uses a simple temporary equilibrium to make explicit the microeconomic behavior underlying these types of models. The closure problem is analyzed through the assumptions on the role of relative prices that it implies. In particular, emphasis is put on two mechanisms - the real balance effect and an expectation effect - in potentially ensuring the existence of an equilibrium. The paper concludes by showing the implications of this analysis for the construction of a theoretical framework for fully dynamic general equilibrium models.

Date: 1987
References: Add references at CitEc
Citations: View citations in EconPapers (51)

Published in: Journal of Development Economics (1987) v.26 n° 1,p.65-76

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: On closure rules, homogeneity and dynamics in applied general equilibrium models (1987)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/9563

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... .ulb.ac.be:2013/9563

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().