COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1272 How to Compute Equilibrium Prices in 1891 William C. Brainard and Herbert E. Scarf August 2000 Irving Fisher’s Ph.D. thesis, submitted to Yale University in 1891, contains a fully articulated general equilibrium model presented with the broad scope and formal mathematical clarity associated with Walras and his successors. In addition, Fisher presents a remarkable hydraulic apparatus for calculating equilibrium prices and the resulting distribution of society's endowments among the agents in the economy. In this paper we provide an analytical description of Fisher’s apparatus, and report the results of simulating the mechanical/hydraulic "machine," illustrating the ability of the apparatus to "compute" equilibrium prices and also to find multiple equilibria. Keywords: Fisher, general equilibrium, hydraulic apparatus, equilibrium prices, computable general equilibrium, algorithms JEL Classification: D58, C63, C68, B13, B31 |
