Walras' Law, Pareto Efficiency, and Intermediation in Overlapping Generations Economies
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
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1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
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Abstract
Aiyagari (1992) demonstrates a connection between the failure of Walras' Law and nonoptimal equilibria for a version of the pure-exchange overlapping generations (OG) econ omy first studied by Samuelson (1958). The significant implication ofWalras' Law in finite economies, given all prices are positive and all consumers are locally nonsatiated, is that an excess supply (in value terms) cannot exist for some subset of goods without an excess demand (in value terms) existing forsome othersubset ofgoods. Aiyagari defines the failure of Walras' Law as a situation in which this implication of Walras' Law does not hold. His basic and interesting result is to show that "a competitive equilibrium is nonoptimal if and only if the above impHcation of Walras' Law fails in its neighborhood."