Prevalence of Equilibrium Non-Uniqueness in Empirically Based General Equilibrium Models

Determine whether multiplicity of competitive equilibria is largely a theoretical curiosity or a prevalent feature in empirically based, high-dimensional general equilibrium models used for policy analysis and quantitative applications.

Background

The paper surveys uniqueness of competitive equilibrium across general equilibrium theory, macroeconomics, finance, and trade/production. When production is introduced and models become large-scale, establishing uniqueness becomes substantially harder and multiplicity can arise, complicating comparative statics and policy analysis.

In discussing earlier literature on production and trade, the authors cite a well-known remark by Kehoe and Whalley emphasizing that it remains unresolved whether non-uniqueness is a pervasive empirical phenomenon or mainly a theoretical curiosity. They further note that part of the difficulty stems from the lack of general algorithms guaranteed to find all equilibria in large-dimensional models.

This open problem is central for applied work, especially in modern quantitative trade and spatial models that involve many regions, industries, and inputs, where uniqueness affects the reliability of counterfactual analysis.