Yves Balasko
Professor of Economics
Department of Economics and Related Studies
Heslington, York YO10 5DD
contact: yb501@york.ac.uk
Selected Publications:
"On the stability of
nonsunspot equilibria," preprint, June 2009; "General equilibrium without utility
functions: How far to go?" with M. Tvede, Economic Theory, ,
2009; "The Equilibrium Manifold," MIT Press; "Out-of-equilibrium price dynamics," Economic Theory, 33, 2007; "Economies with price-dependent preferences," Journal of Economic
Theory, 109, 2003; "Temporary financial equilibria,'' Economic Theory, 21, 2003;
"Markets for composite goods," Journal of Economic Theory, 88, 1999;
"Market
participation and sunspot equilibria," with David Cass and Karl Shell, Review
of Economic Studies, 62, 1995; "The set of regular equilibria," Journal
of Economic Theory, 58, 1992; "The structure of financial equilibrium with exogenous
yields: The case of incomplete markets," with David Cass, Econometrica,
57, 1989; "Foundations of the Theory of General
Equilibrium," Academic
Press, 1988; ; "The overlapping-generations model I and II, " with Karl Shell,
Journal of Economic Theory, 23-24, 1980-1981; "Number and definiteness
of economic equilibria," Journal of Mathematical Economics, 7, 1980; "Some
results on uniqueness and on stability of equilibrium in general equilibrium
theory," Journal of Mathematical Economics, 2, 1975.
Resume (download)
Publication list (download)
Recently published :
The Equilibrium Manifold
Postmodern Developments in the Theory of General Economic Equilibrium
MIT Press
Based on the Arne Ryde Memorial Lectures 2006
Arne Ryde Foundation and University of Lund.
Recent papers:
On the stability of nonsunspot equilibria
Abstract: This paper analyzes the stability of the (Pareto efficient) nonsunspot equilibria as a function of the constraints faced by consumers in their ability to transfer wealth between states of nature. The nonsunspot equilibria are independent of the constraints since they can be identified to the equilibria of the associated certainty economy. It is shown that the equilibria that are stable for the certainty economy define nonsunspot equilibria that are stable in the following two polar cases: 1)~All consumers are unconstrained; 2)~All consumers are fully constrained. Furthermore, the stable certainty equilibria with small trade vectors define nonsunspot equilibria that are stable independently of the constraint levels. Instability can develop for intermediate constraint levels only at nonsunspot equilibria that feature sufficiently large trade vectors. A small change in the constraint levels may then trigger a jump from a Pareto efficient nonsunspot equilibrium to a Pareto inefficient sunspot equilibrium. (preprint, June 2009.)
General equilibrium without utility functions: How far to go? (Joint with Mich Tvede)
Abstract: How far can we go in weakening the assumptions of the general equilibrium model? Existence of equilibrium, structural stability and finiteness of equilibria of regular economies, genericity of regular economies and an index formula for the equilibria of regular economies have been known not to require transitivity and completeness of consumers' preferences. We show in this paper that if consumers' non-ordered preferences satisfy a mild version of convexity already considered in the literature, then the following properties are also satisfied: 1) the smooth manifold structure and the diffeomorphism of the equilibrium manifold with a Euclidean space; 2) the diffeomorphism of the set of no-trade equilibria with a Euclidean space; 3) the openness and genericity of the set of regular equilibria as a subset of the equilibrium manifold; 4) for small trade vectors, the uniqueness, regularity and stability of equilibrium for two version of tatonnement; 5) the pathconnectedness of the sets of stable equilibria. (Forthcoming in Economic Theory, this version: August 2009.)
Time to dump economic theory?
Abstract: The current crisis is used as a pretext to present some of the models of market economies that have been developed in economic theory and to highlight properties of these models that illustrate several possible malfunctions of the market system. (February 2009.)
Individual preference rankings compatible with prices, income distributions and total resources (Joint with Mich Tvede)
Abstract: We consider the problem of determining the individual preference rankings that are necessarily implied by a dataset consisting of prices, income distributions and total resources. We show the equivalence between the compatibility with individual preference rankings and the existence of a solution to a set of linear equalities and inequalities. Using this characterization, we give new proofs of the rationalizability of finite data sets where total resources are close to being collinear and the contractibility and pathconnectedness of the set that consists of rationalizable finite datasets. (Forthcoming in Economic Theory. This version: November 2008.)
The geometry of finite equilibrium datasets (Joint with Mich Tvede)
Abstract: We investigate the geometry of finite datasets defined by equilibrium prices, income distributions, and total resources. We show that the equilibrium condition imposes no restrictions if total resources are collinear, a property that is robust to small perturbations. We also show that the set of equilibrium datasets is pathconnected when the equilibrium condition does impose restrictions on datasets, as for example when total resources are widely non collinear. (Forthcoming in Journal of Mathematical Economics. This version: March 2008.)
Out-of-equilibrium price dynamics
Abstract: A trading-post organization of exchange is shown to determine an out-of-equilibrium price dynamics. The unique equilibrium of quasi-linear economies (defined by log-linear utility functions) is stable for the discrete time version of the dynamics. Equilibria that are stable for the continuous time version include those that satisfy the gross-substitutability property, the no-trade equilibria and, more generally, those for which trade intensity is relatively small. In addition, the set of stable equilibria is path-connected when endowments are allowed to vary without sign restrictions. (Published in Economic Theory, 2007.)
On the satisfaction of peak demand in the certainty case
Abstract: The concept of full-capacity flat-rate equilibrium is explored for a version of the Arrow-Debreu model with time-differentiated goods and production subject to a capacity constraint. The corresponding equilibrium allocations are shown to be inefficient in general. It is also shown that rationing peak-demand is Pareto superior to non-rationing. (Published in the Journal of Mathematical Economics, 2008.)
Do short-run efficiency and optimal capacity imply long-run efficiency?
Abstract: A In a general equilibrium model with production, the long-run is defined by capacity being an endogenous variable. Associated with every long-run equilibrium is a short-run model where capacity is set at its long-run equilibrium value. The long-run equilibrium is then an equilibrium of the short-run model. But the converse is not always true. There exist short-run models that feature multiple (short-run) equilibria. Only one of these equilibria---the restriction of the long-run equilibrium---is long-run efficient. Rate-of-return regulation is a simple way, however, of preventing the market from selecting the long-run inefficient short-run equilibria. (August 2005.)
The equilibrium manifold keeps the memory of individual demand functions
Abstract: It is shown that the property that the equilibrium manifold keeps the memory of the individual demand functions holds true if every individual demand function satisfies the following three properties: 1) It is a function of commodity prices and of consumer's income; 2) Consumption belongs to the nonnegative orthant of the commodity space; 3) Walras law. Neither differentiability nor continuity are necessary. In addition, the demand functions do not have to be utility maximizing subject to budget constraints. (Published in Economic Theory, 2004.)
Temporary financial equilibrium
Abstract: In a two-period pure exchange economy with financial assets, a temporary financial equilibrium is an equilibrium of the current spot and security markets given forecasts of future prices and returns. We show that the temporary equilibrium model can be interpreted as a Walrasian model where preferences depend on prices. This idenfication implies, among other consequences, the generic determinateness of the equilibrium solution. It also highlights the mechanism through which forecasts parameterize current market prices of goods and assets. (Published in Economic Theory, 2003.)
Economies with price-dependent preferences
Abstract: Except existence, not much is known of economies where individual preferences are affected by prices. We show that the main properties of competitive equilibria that fall under the general heading of qualitative comparative statics remain true when preferences are price dependent, provided that the total resources are allowed to vary in the parameter space. The equilibrium set is a smooth manifold diffeomorphic to a Euclidean space; the natural projection is a smooth proper map, with topological degree one; equilibria always exist, and are locally unique for an open and dense set of economies. (Published in the Journal of Economic Theory, 2003.)