Question

Main recent Criticisms of General Equilibrium

Answer 1

General equilibrium theory attempts to explain the behaviour of supply ,demand and prices in whole economy .this explain this behaviour with seversl or many interacting markets by seeking to prove that the interaction of demand and supply will result in overall general equilibrium.

Critisms -

Any restrictions on the shape of excess demand functions are stringent.this model lacks empirical content.This model is said to be centrally planned economy and has no impact upon decentralized market economy.This model is based upon pure mathematics which has no connection with actual economies.This model express lack of real understanding of keynesian views on the part of these famous economists.