Comparative statics in competitive general equilibrium (GE) environments provide insight into the operation of GE models and a means to confront GE models with data. This article focuses on a canonical comparative statics prediction: in an exchange economy, aggregate endowment changes are negatively related to equilibrium price changes. In particular, an increase in the aggregate endowment of a commodity lowers its equilibrium price.
KeywordsAggregate excess demand Asset pricing Comparative statics Competitive general equilibrium Debreu–Mantel–Sonnenschein theorem Demand shocks Endowment changes General equilibrium Gross substitutes Hicks, J. Partial equilibrium Production economies Rybcyznski theorem Stolper–Samuelson theorem Supply shocks Weak axiom of revealed preference
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