Exploring General Equilibrium

with a previously unpublished paper by the author and a new foreword by Edward Glaeser Fischer Black was known for his brilliance as well as for his sometimes controversial opinions. Highly respected for his scholarly writings in finance, with this book he moved into different territory, offering an incisive, unconventional assessment of general equilibrium theory and what that theory reveals about business cycles, growth, and labor economics. In Exploring General Equilibrium,Black asserts that the general equilibrium approach can be used to explain most of the economy's behavior. It can explain business cycles and growth without using sticky prices, irrationality, economies of scale, or imperfect competition. It can explain the volatility of consumption, output, sales, investment, and inventories with axiomatic utility and constant-returns-to-scale production. It can explain temporary layoffs, job changes with and without intervening unemployment, and the behavior of vacancies. It can explain lower wages in part-time jobs, wages that increase rapidly with time on the job, and the forces that cause migration from poor to rich countries. This paperback edition of Exploring General Equilibriumincludes a previously unpublished paper by Black, "Neutral Technical Change," edited by Harvard economist Edward Glaeser, who also contributes the foreword.

Fischer Black (1938-1995), coauthor with Myron Scholes of the Black-Scholes equation on option pricing, held positions at the University of Chicago, MIT's Sloan School of Management, and Goldman Sachs. In 1997, Scholes received the Nobel Prize in Economics for his work with Black on option pricing.