Production, trade, prices, exchange rates and equilibration in large experimental economies

Charles Noussair, Charles Plott, Raymond Riezman

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

We study market equilibration in laboratory economies that are larger and more complex than any that have been studied experimentally to date. Complexity is derived from the fact that the economies are "international" in economic structure with multiple input, output, and foreign exchange markets in operation. The economies have twenty-one markets and due to the fact that they have roughly fifty agents, the economies are characterized by several hundred equations. In spite of the complexity and interdependence of the economy, the results demonstrate the substantial power of the general equilibrium model of perfect competition to predict the direction of movement of market-level variables. Empirical patterns in the convergence process are explored and described.

Original languageEnglish (US)
Pages (from-to)49-76
Number of pages28
JournalEuropean Economic Review
Volume51
Issue number1
DOIs
StatePublished - Jan 2007
Externally publishedYes

Keywords

  • Exchange rates
  • Experiment
  • International trade

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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