Lehmann-Waffenschmidt M. Economic Evolution and Equilibrium: Bridging the Gap

Springer, 2007. – 265 p. – ISBN: 3540686622, 9783540686620Series: Lecture Notes in Economics and Mathematical Systems, Vol. 591
This work uses various model frameworks to study the evolution of equilibria in an open loop evolving economy in which the model characteristics evolve without any directional restrictions except for continuity. Applying mathematical methods, it is shown that equilibria can always be adapted in a piecewise gradual, non bang-bang way. Furthermore, the analysis provides a complete characterization of the structure of the equilibrium price set of evolving exchange economies. The results allow for policy implications to be derived for a gradual, frictionless tuning of equilibrium values for open loop evolving economies. This analysis is innovative in both its approach and its results. The book contributes to bridging the gap between the traditional static, closed loop, dynamic equilibrium approach and the idea of open loop evolution which has become an attractive concept in economics in recent years.
Keywords » Bang-bang policy - Equilibrium - Evolution - Open-loop - Piecemeal policy