Traditional work on economic dynamics (such as, for example, growth theory and real business cycles) postulates as a starting point the existence of a set of phase variables, whose values fully characterise the economy at any point in time. Despite relying on a general equilibrium framework, such approaches do not justify this assumption in terms of the underlying theory, thereby failing to link economic dynamics with fundamental static principles. This thesis aims to suggest a remedy by introducing dynamics explicitly into Debreu's essentially static framework. This situation can be modelled in a certain well-defined sense. The suggested approach is novel to the economics literature, yet it preserves the fundamental notion of excess demand functions as the driving force behind trade, consumption and production processes. The formulated model yields a system of partial differential equations. For our purposes the most important aspect of this system is that despite its infinitedimensional phase space, we can show that conditions imposed by the economic nature of the underlying problem imply the existence of a finite-dimensional global attractor. In turn, the essential property of a finite-dimensional global attractor is the fact that it can be parameterised using a finite number of variables. These need not have been expliciljly present in the original equations, and therefore are not directly related to goods produced, consumed, and traded. In other words, it is shown that operations of free markets as postulated by Debreu imply the existence of a finite number of phase coordinates that characterise the economy at any point in time, as postulated by existing work on economic growth, business cycles, learning, etc.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:486270 |
| Date | January 2007 |
| Creators | Kuksin, Nikita Sergei |
| Publisher | Heriot-Watt University |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://hdl.handle.net/10399/2075 |
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