Evolution of Prices under the Inertia Principle

Aubin J-P (1989). Evolution of Prices under the Inertia Principle. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-89-085

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Abstract

The decentralized evolution of allocations of resources among consumers described by their change functions is characterized by a regulation rule associating with each allocation the subset of prices regulating them. Sufficient budgetary conditions analog to the Walras law for the viability of such evolutions are then provided. Next, the issue of finding feedback controls is tackled: conditions under which slow evolutions are given.

More to the point, dynamical feedback controls obeying the inertia principle are provided: prices are changed only when the viability of the evolution mechanism is at stakes. We then derive the differential equations governing the heavy evolution of prices: for a given bound on inflation rates, the price evolves with minimal velocity.

Item Type: Monograph (IIASA Working Paper)
Research Programs: System and Decision Sciences - Core (SDS)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 01:59
Last Modified: 20 Jul 2016 23:07
URI: http://pure.iiasa.ac.at/3259

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