Ph.D. in ECONOMICS – Universities of Milan and Pavia
Introduction to General Equilibrium Theory
Academic year 2024-25
Course Objective:
In these lectures we will introduce the main ideas of general equilibrium theory, also in economies with uncertainty and asymmetric information.
Course Outline:
Part I: the Arrow Debreu model:
1. The model and the existence of equilibrium. [WMG 17 B, C]
2. The proof of existence. [WMG 17 App B]
3. The first and second theorems of welfare economics. [WMG 16 A-F, 17 App A]
4. Regularity. Generic local uniqueness. [MWG 17 D]
Part II: incomplete markets:
5. Trading securities. No Arbitrage. Radner Equilibrium. The one good case: Finance. [WMG 19 A-E, LN 1, 2]
6. Production: criterion of the firm. The problem of existence with many goods. [WMG 19 F, LN 3,4,5]
7. Constrained inefficiency, a role for fiscal policy. [WMG 19 F, GP86, LN 6]
8. Indeterminacy, a role for monetary policy. [LN 7, 8]
9. Asymmetric information. [LN 9]
10. Trading in contracts. [LN 10]
Mas-Colell, Whinston and Green [MWG] , “Microeconomic theory”, OUP.
chapters: 16, 17 (A-D, app A and B), 19 (A-F).
Lecture notes on Incomplete Markets [LN]. Slides
JDG1990-Introduction to Incomplete Markets