A regular economy is an economy characterized by an excess demand function which has the property that its slope at any equilibrium price vector is non-zero. In other words, if we graph the excess demand function against prices, then the excess demand function "cuts" the x-axis assuring that each equilibrium is locally unique. Local uniqueness in turn permits the use of comparative statics - an analysis of how the economy responds to external shocks - as long as these shocks are not too large.
An important result due to Debreu (1970) states that almost any economy, defined by an initial distribution of consumer's endowments, is regular. In technical terms, the set of nonregular economies is of Lebesgue measure zero.
Combined with the index theorem this result implies that almost any economy will have a finite (and odd) number of equilibria.
Famous quotes containing the words regular and/or economy:
“A regular council was held with the Indians, who had come in on their ponies, and speeches were made on both sides through an interpreter, quite in the described mode,—the Indians, as usual, having the advantage in point of truth and earnestness, and therefore of eloquence. The most prominent chief was named Little Crow. They were quite dissatisfied with the white man’s treatment of them, and probably have reason to be so.”
—Henry David Thoreau (1817–1862)
“The basis of political economy is non-interference. The only safe rule is found in the self-adjusting meter of demand and supply. Do not legislate. Meddle, and you snap the sinews with your sumptuary laws.”
—Ralph Waldo Emerson (1803–1882)