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In economics, economic equilibrium is a situation in which the economic forces of supply and demand are balanced, meaning that economic variables will no longer change. [ 1 ] Market equilibrium in this case is a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal ...
The structural equilibrium model is a matrix-form computable general equilibrium model in new structural economics. [30] [31] This model is an extension of the John von Neumann's general equilibrium model (see Computable general equilibrium for details). Its computation can be performed using the R package GE.
Real business-cycle theory (RBC theory) is a class of new classical macroeconomics models in which business-cycle fluctuations are accounted for by real, in contrast to nominal, shocks. [1] RBC theory sees business cycle fluctuations as the efficient response to exogenous changes in the real economic environment.
The interaction of the agents in markets cover every period of the business cycle which ultimately qualifies the "general equilibrium" aspect of this model. The preferences (objectives) of the agents in the economy must be specified. For example, households might be assumed to maximize a utility function over
Partial equilibrium, the equilibrium price and quantity which come from the cross of supply and demand in a competitive market; Radner equilibrium, an economic concept defined by economist Roy Radner in the context of general equilibrium; Recursive competitive equilibrium, an economic equilibrium concept associated with a dynamic program
The structural equilibrium model can be solved using the GE package in R. Below, we illustrate the above structural equilibrium model through a linear programming example, [16] with the following assumptions: (1) There are 3 types of primary factors, with quantities given by = (,,). These 3 primary factors can be used to produce a type of product.
The original Heckscher–Ohlin model and extended model such as the Vanek model performs poorly, as it is shown in the section "Econometric testing of H–O model theorems". Daniel Trefler and Susan Chun Zhu summarizes their paper that "It is hard to believe that factor endowments theory [editor's note: in other words, Heckscher–Ohlin–Vanek ...
[1] General equilibrium analysis, in contrast, begins with tastes, endowments, and technology being fixed, but takes into account feedback effects between the prices and quantities of all goods in the economy. The supply and demand model originated by Alfred Marshall is the paradigmatic example of a partial equilibrium model.