General equilibrium without utility functions: how far to go?

How far can we go in weakening the assumptions of the general equilibrium model? Existence of equilibrium, structural stability and finiteness of equilibria of regular economies, genericity of regular economies and an index formula for the equilibria of regular economies have been known not to require transitivity and completeness of consumers’ preferences. We show in this paper that if consumers’ non-ordered preferences satisfy a mild version of convexity already considered in the literature, then the following properties are also satisfied: (1) the smooth manifold structure and the diffeomorphism of the equilibrium manifold with a Euclidean space; (2) the diffeomorphism of the set of no-trade equilibria with a Euclidean space; (3) the openness and genericity of the set of regular equilibria as a subset of the equilibrium manifold; (4) for small trade vectors, the uniqueness, regularity and stability of equilibrium for two version of tatonnement; (5) the pathconnectedness of the sets of stable equilibria.     

Trade expansion and employment generation: how mercantilist does China have to be?

We conduct an input–output analysis of China’s employment changes due to changes in trade structure on a sectoral level. We find that between 2002 and 2007 China generated about 71 million jobs due to trade expansion. We also estimate the additional amount of trade that would be needed if China were using its trade surplus as the main tool to absorb its excess labour. Given the magnitude of this estimated amount, we conclude that this ‘mercantilist’ approach to excess labour absorption is not feasible. Finally, using Spearman rank correlation analysis, we find that the ranking of China’s sectors’ employment generation capacities is inversely related to the ranking of these sectors’ trade performances. This suggests that the ‘mercantilist’ approach to excess labour absorption is not only infeasible but also inefficient. We end the paper by suggesting a more balanced growth path for China.