chapter  23
14 Pages


WithJohn Whalley

In the last few years, economists have begun to use computers with large data sets to explore just how useful Walrasian general equilibrium analysis can be made for policy analysis. These developments provide the basis for this chapter. Joseph Schumpeter once characterized the Walrasian system of general equilibrium as the ‘Magna Carta’ of economics (Blaug 1968:576)—the broad integrating framework which captured the interplay between economic forces on a system-wide basis. However, others have instead questioned whether the Walrasian system could ever be more than a broad organizational framework for thinking through the implications of interdependence between markets and economic actors.