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Say's law is roughly that "an increase in aggregate supply generates an equal increase in aggregate demand".

Can this law be stated, or derived from, a model of general equilibrium?

EDIT: what if we assume a dynamic economy? I.e. where saving is possible.

Giskard
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user56834
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1 Answers1

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How about Walras's law?

Walras's law is a principle in general equilibrium theory asserting that budget constraints imply that the values of excess demand (or, conversely, excess market supplies) must sum to zero.

Giskard
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  • Ofcourse... i should have athought about that. But what if we assume a dynamic economy, so that saving is possible? – user56834 Feb 01 '18 at 10:36
  • @Programmer2134 I don't see how that alters the argument. Gen. eq. theory allows for intertemporal decisions, you can treat goods from different periods as different goods. The general equilibrium, wherein there is an equilibrium in each market will still result in an equilibrium for each good in each time period. Walras's law still applies. – Giskard Feb 01 '18 at 13:27
  • @Programmer2134 As an aside: If this additional condition would strongly alter your question then it is not very good form to edit it in after your original question has been answered. – Giskard Feb 01 '18 at 13:30