3. Computing Equilibrium

Financial Theory (ECON 251) Our understanding of the economy will be more tangible and vivid if we can in principle explain all the economic decisions of every agent in the economy. This lecture demonstrates, with two examples, how the theory lets us calculate equilibrium prices and allocations in a simple economy, either by hand or using a computer. In future lectures we shall extend this method so as to compute equilibrium in financial economies with stocks and bonds and other financial assets. 00:00 - Chapter 1. Introduction 02:48 - Chapter 2. Welfare and Utility in Free Markets 16:52 - Chapter 3. Equilibrium amidst Consumption and Endowments 32:43 - Chapter 4. Anticipation of Prices 52:53 - Chapter 5. Log Utilities and Computer Models of Equilibrium This course was recorded in Fall 2009.