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The Proof of the Original Walras' Law

Hak Choi

Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research

June 1, 2008

Profitable Economics Working Paper

General equilibrium is the foundation of Economics, while Walras' law the foundation of general equilibrium. However, because Walras could not prove his own law, this law has been misunderstood to be the exercise of counting equations, and eliminating some equation or market. This paper shows how the original Walras' law can be correctly reestablished. It is actually Say's law. General equilibrium should be more correctly called pair-wise equilibrium. Disequilibrium, which should be better called balancing disequilibrium, is also an important part of Walras' law. A correct understanding of this Walras' law is important to many fields of studies, e.g., international trade and unemployment theories.

Number of Pages in PDF File: 19

Keywords: Walras' law, Say's law, Offer curve, Comparative advantage, Gain from trade, tariff

JEL Classification: D5, E52, F11

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Date posted: July 3, 2008 ; Last revised: April 1, 2009

Suggested Citation

Choi, Hak, The Proof of the Original Walras' Law (June 1, 2008). Profitable Economics Working Paper. Available at SSRN: http://ssrn.com/abstract=1154911 or http://dx.doi.org/10.2139/ssrn.1154911

Contact Information

Hak Choi (Contact Author)
Chienkuo Technology University - Department of International Business ( email )
No.1, Chiehsou N. Road
Changhua City, 500
+886 91 901-4618 (Phone)
HOME PAGE: http://www.ProfitableEconomics.com
Chung-Hua Institution for Economic Research ( email )
75, Changhsin St.
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