Dynamic economic theory. A viability approach (Q1359941)

This monograph is devoted to the viability approach to dynamic economics. The viability approach differs from the traditional dynamic analysis in that it is concerned with non-deterministic (not necessarily stochastic) evolution of the economy over time, rather than local stability and asymptotic properties of the model. The monograph does not appeal to intertemporal optimization, because the latter requires some knowledge of the future. The volume is divided into three parts: Part I explains the evolutionary perspective. Part II covers ecodynamics, and Part III is a mathematical tool box. There are two chapters in Part I. Chapter 1 compares the viable dynamic process with the Walrasian t*tonnement process and shows that the t*tonnement process is not viable. Chapter 2 provides illustrative examples to demonstrate how to calculate the viability kernel, namely the set of initial states from which there is at least one viable solution. Part II contains 7 chapters. Chapter 3 describes the dynamic model and states the main viability theorems of dynamic resource allocation. Chapter 4 focuses on slow evolutions, namely the evolutions governed by prices with minimum norms. Chapter 5 addresses the issue of how to design dynamic economies with prices as ''viability'' multipliers to ensure the viability of the economies. Chapter 6 answers the questions that arise when a constrained subset is not viable. Particularly attention is given to how to remain viable as long as possible and how to restore viability as soon as possible. Chapter 7 derives the adjustment laws such as the laws of supply and demand from the confrontation of the dynamic economy with constraints. Chapter 8 is devoted to dynamic inequalities. Chapter 9 applies the viability approach to dynamic games. The mathematical tool box in part III surveys the available tools that are relevant and useful for investigating the issues covered in this book. Chapters 10 focuses on pseudo inverses of linear operators. Chapter 12 covers set-valued analysis. Chapter 13 and 14 are devoted to convex optimization and equilibrium theory. Chapter 15 presents the stochastic version of the viability theory. This book contributes to the literature by expanding on the Arrow-Debreu-Hahn legacy and by answering the criticisms of the classical static theory by von Neumann and Morgenstern. The viability approach is a step forward towards the Walrasian t*tonnement process in that it allows the characterization of the model during transition periods when the economy is out of equilibrium.