General

Teachers: Jean Marc Bonnisseau & Elena del Mercato
Class: Friday, from 9:00 to 12:00, Room R1-09 (it means first floor, room “09”) - PSE Campus Jourdan, 48 Boulevard Jourdan, 75014 Paris
E-mails: Jean-Marc.Bonnisseau@univ-paris1.fr , Elena.delMercato@univ-paris1.fr

Course in English - First Semester 2021/2022

General Presentation

The general equilibrium theory studies the interactions among heterogeneous agents on commodity and financial markets. The course begins with an outline of the main properties of a competitive equilibrium in the classical Arrow-Debreu model (existence, efficiency, local uniqueness). The course then focuses on advanced questions arising from market imperfections and financial markets, such as externalities, increasing returns to scale and incomplete financial markets.

Key words: equilibrium, competition, market imperfections: externalities, financial markets.

Class: Every Friday, 9:00 - 12:00, from September 10 to December 10, 2021 - Room R1-09 - PSE Campus Jourdan, 48 Boulevard Jourdan, 75014 Paris

The course consists of two parts: "General equilibrium and Externalities" and "General equilibrium and Financial Markets", see below.

"General Overview": Friday, September 10, 2021

"General equilibrium and Externalities"

Duration: From Friday, September 17 to Friday, October 22, 2021

Mode of evaluation: attendance & presentation of selected research articles and/or written exam

Content:

- An overview of general equilibrium theory; main results.

- Competitive equilibrium with externalities; basic results.

- Externalities and market failure; perfect internalization, Pareto improving policies.

- Externalities in production economies; increasing returns to scale; marginal pricing rule.

"General equilibrium and Financial Markets"

Duration: From Friday, November 5 to Friday, December 10, 2021

Mode of evaluation: attendance & presentation of selected research articles and/or written exam

Content:

- The two period economy with uncertainty; risk aversion

- Arrow securities, financial markets ; real, nominal and numeraire assets

- Absence of arbitrage opportunities, existence of present value vector, uniqueness, risk neutral probability

- Completeness of the financial structure

- Existence of a financial equilibrium for nominal and numeraire asset; generic existence for real assets

Fundamentals: Chapter 3 Classical Demand Thoery, pages 40-57, in MWG

MWG reads "Mas-Colell, A., Whinston, M.D., and Green, J.R., Microeconomic Theory. Oxford University Press (1995)".

Homework 3 on Part 1: Remote written essay on a selected reserach article, Saturday, November 13, 2021.