Proportional budgeting and decentralization
Article Abstract:
A theorem concerning the joint optimality of proportional budgeting and decentralization is advanced. The theorem, which severely limit allocations, states that the two procedures are optimal 'if and only if the objective function is homothetic and separable.' When the condition is met, however, the aggregator functions may be formulated as homogeneous of degree one and Groman's concept of strong price aggregation is satisfied.
Publication Name: Econometrica
Subject: Mathematics
ISSN: 0012-9682
Year: 1995
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A locally stable adjustment process
Article Abstract:
The myth of the Walrasian adjustment process to achieve economic equilibria is debunked. The process, which states that price modifications are needed to address excess demand, contains errors because it fails to consider the effect of price movements in one sector on other markets. To demonstrate this, a process whose 'regular competitive equilibria are locally stable' is demonstrated and investigated.
Publication Name: Econometrica
Subject: Mathematics
ISSN: 0012-9682
Year: 1995
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