Of General Equilibrium Analysis Of Existence: The Budget Constraint Perspective

In order to prove the existence of general equilibrium, the budget constraints need to be setup properly. Otherwise, there dose not exist the state of general equilibrium in the economy. Itimplies that, the total amount of funds acquired by the agents, whose excess demands forcommodities is positive value, is equivalent to the total amount of funds of the agents,whoseexcess demands for commodities is negative value. And, in the monetary and financial economy,every agent owns sufficient money to achieve attentions of demand and supply. The above twopoints imply that, first, the short selling of agent must be limited; second, there exist somemoderate punishments and institutional arrangements, which can not only prevent universaldefaults, but also meet reasonable financing demands; third, there exist some suitableimplementation mechanisms, which can prevent agents' ponzi games to make optimal solutions.Some classic literatures make unrealistic assumptions to prove the existence of generalequilibrium. Roughly speaking, the assumptions include five aspects. First,"Walras' auctioneer"makes appropriate arrangements to fulfill every agent's demand and supply without costs. Second,the institutions that is advantageous to debtors should be arranged, which can avoid disequilibriumphenomenon. Third, there exists a special agent, who buys and sells financial products to boostconfidents of other agents. Fourth, there exists a special agent, whose demand and supply tofinancial products are exactly equal to other agents' supply and demand for them. Fifth, theimplementations that prevent agents' ponzi games could be completely performed, which cannotcause credit ration. While relaxing these assumptions, it could make good explanations to somedisequilibrium phenomenon.