Chapter

Equilibrium Growth. (III) Normative Properties

Michio Morishima

in Theory of Economic Growth

Published in print December 1969 | ISBN: 9780198281641
Published online November 2003 | e-ISBN: 9780191596667 | DOI: http://dx.doi.org/10.1093/0198281641.003.0009
 Equilibrium Growth. (III) Normative Properties

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Devoted to establishing the optimality of competitive equilibrium paths of various orders. So far three kinds of equilibrium growth paths have been discussed in the book: the Cassel–von Neumann path of balanced growth, the Lindahl–Hicks sequence of temporary equilibria, and the Hicks–Malinvaud perfect equilibrium over time. These are now examined for efficiency and optimality. Each of them is compared with any other in succession. The different sections of the chapter discuss definitions of efficiency and Pareto optimality, short‐run efficiency of temporary equilibrium and long‐run efficiency of full equilibrium, Pareto optimality of the Lindahl–Hicks and the Hicks–Malinvaud path, Farkas’ theorem of linear inequalities, the fact that shadow prices associated with a Pareto optimum obey the rules of competitive pricing, the conditions that should be satisfied in order for a given point of Pareto optimum to be a competitive equilibrium, and the Golden Rule of Accumulation.

Keywords: G. Cassel; competitive equilibrium; competitive equilibrium paths; competitive pricing; economic growth; efficiency; equilibrium growth; Farkas’ theorem of linear inequalities; Golden Rule of Accumulation; J. R. Hicks; Hicks–Malinvaud equilibrium growth path; Hicks–Malinvaud perfect equilibrium; E. Lindahl; Lindahl–Hicks sequence of temporary equilibria; long‐run efficiency of full equilibrium; E. Malvinaud; J. von Neumann; optimality; Pareto optimality; shadow prices; short‐run efficiency of temporary equilibrium

Chapter.  9901 words. 

Subjects: Economic Development and Growth

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