Mechanisms leading to equilibrium in economy with financial market

Abstract

Joseph Schumpeter pointed to the important role of the economic mechanism, understood as a set of rules and regularities explaining the economic life, within the evolution of the economy. Innovative mechanisms as well as mechanisms of adaptation of innovations into agents' activities were at the core of his interest. This paper aims at designing some kinds of innovative and non-innovative mechanisms that can appear within the economic evolution. Hurwicz mechanisms are used to rigorously study the processes within which real and financial innovations are adopted into routine agents' activities. Mechanisms that could result in the existence of equilibrium in the economy with financial markets and private ownership are specifically under our consideration. Due to the above, qualitative properties of analysed mechanisms can be examined with respect to Schumpeter's concepts.

The long-run equilibrium in the context of COVID-19 pandemic

“…Some results on mathematical modelling and analyzing of the Hurwicz mechanisms leading to equilibrium in competitive economy can be found in papers by Lipieta (2018), Lipieta and Malawski (2021) as well as Lipieta and Ćwięczek (2020). In Lipieta (2018), it was shown that innovative and imitative processes can coexist in the framework of the same mechanism as well as some preliminary results on mechanisms resulting in the long-run equilibrium were presented.…”

“…Lipieta and Malawski (2021) analyzed the ecological mechanisms in the results of which at least one harmful commodity or obsolete technology could be excluded from economic processes. Lipieta and Ćwięczek (2020) focused on the exploration of equilibrium mechanisms in economy with financial market.…”

“…In competitive economies the agents' activities can be interpreted as the information sent by market participants to others (compare to Hurwicz, 1987; Lipieta and Lipieta, 2017; Lipieta and Ćwięczek, 2020; Lipieta and Malawski, 2021). Therefore the triplewhere:xˇk(t)∈Xk(t) is a plan of action of consumer k∈At at time t; xˇk(t)=0∈normalℛℓt if k∉At,yˇk(t)∈Yk(t) is a plan of action of producer k∈Bt at time t; yˇk(t)=0∈normalℛℓt if k∉Bt…”