The Proof of the Original Walras' Law

Profitable Economics Working Paper

19 Pages Posted: 3 Jul 2008 Last revised: 1 Apr 2009

Hak Choi

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

Date Written: June 1, 2008

Abstract

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.

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

JEL Classification: D5, E52, F11

Suggested Citation

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

Hak Choi (Contact Author)

Chienkuo Technology University - Department of International Business ( email )

No.1, Chiehsou N. Road
Changhua City, 500
Taiwan
+886 91 901-4618 (Phone)

HOME PAGE: http://euntold.wordpress.com

Chung-Hua Institution for Economic Research ( email )

75, Changhsin St.
Taipei
Taiwan

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