Syllabus academic year 2009/2010
(Created 2009-08-11.)

Higher education credits: 7,5. Grading scale: TH. Level: A (Second level). Language of instruction: The course will be given in English on demand. TEK137 overlap following cours/es: NEK702, NEKM46, NEKM46 och NEKM46. Optional for: I4, Pi4. Course coordinator: Professor Lars-Gunnar Svensson,, Nationalekonomiska inst. Assessment: Written exams take place at the end of the course. Further information: Corresponds to NEKM46. Home page:

The aim of the course is to give deeper insights into advanced general equilibrum models.

Knowledge and understanding
For a passing grade the student must

· obtain deeper knowledge in microeconomic theory concerning general equilibrium in an exchange economy as well as in a production economy,

· understand and account of the relationship between equilibrium and efficient use of resources,

· understand and account for general equilibrium models with incomplete markets and with uncertainty,

· have knowledge of the relationship between general equilibrium theory, welfare theory and the elementary social choice theory.

Skills and abilities
For a passing grade the student must

· apply the theory in cases where the entire economy is analyzed,

· estimate the consequences for general equilibrium when the basic assumptions for the theory are not satisfied, e.g., minimum wages and unemployment or tax edges and loss of welfare.

Judgement and approach
For a passing grade the student must

have developed the ability to pursue further studies in the subject and should be able to search for and evaluate information with a high degree of independence

The course starts with an roduction of a general equilibrium model with private ownership. Then, conditions for existence, uniqueness and stability of equilibrium are analyzed. The relationship between Pareto efficiency and general equilibrium is demonstrated. The cooperative concept “the core” is introduced and the relationship to general equilibrium is established. The interpretation of the general equilibrium model in terms of uncertainty is discussed and the consequences of incomplete markets as trade with assets instead of direct trade with goods are analyzed. The problem of implementation of efficiency in the general equilibrium model is discussed and analyzed in the social choice theory.

Mas-Colell A, Whinston M D and Green J R: Microeconomic Theory, Oxford University Press, 1995.
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