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:
“The solid and well-defined fir-tops, like sharp and regular spearheads, black against the sky, gave a peculiar, dark, and sombre look to the forest.”
—Henry David Thoreau (1817–1862)
“Quidquid luce fuit tenebris agit: but also the other way around. What we experience in dreams, so long as we experience it frequently, is in the end just as much a part of the total economy of our soul as anything we “really” experience: because of it we are richer or poorer, are sensitive to one need more or less, and are eventually guided a little by our dream-habits in broad daylight and even in the most cheerful moments occupying our waking spirit.”
—Friedrich Nietzsche (1844–1900)