Tâtonnement and Price Setting in General Equilibrium

Iván Werning; Guido Lorenzoni

Tâtonnement and Price Setting in General Equilibrium

Theoretical Economics 2026-08-05 v1

Authors: Iván Werning , Guido Lorenzoni

Abstract

A foundational question in General Equilibrium theory---when is an equilibrium stable?---has remained largely unresolved for over 150 years despite important contributions. This paper proposes a resolution.

Keywords

tatonnement price setting general equilibrium stability equilibrium

Cite

@article{arxiv.2608.05355,
  title  = {Tâtonnement and Price Setting in General Equilibrium},
  author = {Iván Werning and Guido Lorenzoni},
  journal= {arXiv preprint arXiv:2608.05355},
  year   = {2026}
}