Resource booms in competitive equilibria with decreasing returns to scale

We are concerned with the effects of a resource boom upon the industries of a trading economy. Such effects have come to be known in the literature as Dutch Disease. We look into related supply-side aspects which appear to be significant if seen from the viewpoint of microeconomic general equilibrium theory under conditions of decreasing returns to scale in production. Several comparative-statics results will be presented for the small-country case where there may also exist nontraded goods. In particular, we argue that in the presence of diseconomies of scale input substitution becomes a crucial issue. We also briefly discuss welfare implications in terms of changes in factor prices and GNP.     

Pure and randomized equilibria in the stochastic von Neumann–Gale model

The paper examines the problem of the existence of equilibrium for the stochastic analogue of the von Neumann–Gale model of economic growth. The mathematical framework of the model is a theory of set-valued random dynamical systems defined by positive stochastic operators with certain properties of convexity and homogeneity. Existence theorems for equilibria in such systems may be regarded as generalizations of the Perron–Frobenius theorem on eigenvalues and eigenvectors of positive matrices. The known results of this kind are obtained under rather restrictive assumptions. We show that these assumptions can be substantially relaxed if one allows for randomization. The main result of the paper is an existence theorem for randomized equilibria. Some special cases (models defined by positive matrices) are considered in which the existence of pure equilibria can be established.